Investor Financing For Insurance Agency To Be An Insurance Company Key Highlights for Insurance Bill in India: Increased Consumer Safety & Scope of Investment

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Key Highlights for Insurance Bill in India: Increased Consumer Safety & Scope of Investment

The Insurance Bill which was passed in March 2015 in both houses is expected to have a profound impact on the Indian Insurance industry. Much anticipated and awaited, this amendment offers many benefits to both insurance companies and policyholders. Increased powers of regulatory bodies, greater protection to policyholders and increased levels of foreign investment in the sector are some of the key features of the Insurance Bill.

Here are some of the main highlights of the bill and how they might affect you:

Increase in Foreign Investment: The new amendment allows up to 49% foreign investment in Indian insurance companies from now onwards. This increased capital flow is expected to revitalize the industry together. National players will now be able to invest in new products and expand their portfolio manifold.

What does this mean for you: how will it affect you as a policyholder? At first glance, this may mean nothing at all, but increased foreign participation means increased competition, a wider range of products and higher professionalism. Increased competition in the market will also reduce malpractices such as miss-selling and misleading policyholders. So, in the long term this move can totally change the whole Indian Insurance market scenario.

Empowered IRDAI: This action really helped strengthen IRDAI’s fist. These regulatory agencies will now be involved at the grassroots level, such as appointing insurance agents and monitoring their suitability, capability and professionalism.

Also this regulatory body is now empowered to regulate key areas of Insurance Companies such as expenses, investments, commissions paid to agents, code of conduct etc.

What this means for you: This enhanced power of IRDAI will surely reduce a lot of the malpractices that are rampant today in the Insurance market in India. So, as a policyholder, your money will now be safer than before.

Consumer safety: The Indian Insurance Market has never been as safe as it is now from a consumer point of view. If you’re worried about being misled by insurance agents, this will give you peace of mind. In an attempt to reduce malpractices, the new amendment imposes fines ranging from INR 1 Crore to INR 25 Crore on any Insurance Company that commits a misrepresentation and misrepresentation.

What this means for you: Given these high penalties, companies tend to apply strict norms to their agents, which in turn will provide you with more protection as a consumer.

This bill will also simplify the payment process for prospective policyholders.

Another very significant amendment that this bill brings is shortening the rejection period for each policy. The rejection time is a certain period of time during which a policy can be declared null and void due to incorrect information provided by the policyholder. The new bill was shortened to 3 years this time, to keep consumer interests intact.

Health Insurance: Health insurance in India has never received the status of a separate business vertical. However, the Insurance Bill identifies and addresses these problems. The amendment defines “Business Health Insurance” in its entirety and includes personal accident and travel accident coverage within it.

What it means for you: This move is sure to pave the way for many powerful insurance products related to health.

Empowered Industries Council: The two insurance industry boards The Life Insurance Council and the General Insurance Board are now given the status of self-governing bodies under this Act. Now, these two industry councils have the right to draft laws for their meetings and elections. The agency may also collect fees and collect them from its members.

What this means for you: Empowerment of these agencies has now opened avenues of communication between industry stakeholders.

Opening Reinsurance business front in India: The new amendments in the law have opened up the reinsurance segment quite broadly. With a foreign investment limit of 49%, foreign investors can now insure part of an Insurance Company.

What this means for you: The reinsurance company removes a major risk factor from your insurance company. Reinsurance companies are generally more knowledgeable about international insurance practices. Thus opening up the possibility of reinsurance will bring knowledge and expertise from international players and make insurance companies much more stable.

With all these key points in mind, the 2015 Insurance Bill is strong and can actually live up to most expectations.

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