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Our Bureau

Mumbai , Oct 12

The comprehensive Bill on insurance provides for an increase in the paid-up capital of Life Insurance Corporation of India to Rs 100 crore from the current Rs 5 crore.

Mr G.C. Chaturvedi, Joint Secretary, Ministry of Finance, said that the Bill would make several key changes in laws pertaining to this sector.

These include amendments to the Insurance Act (1938), LIC Act (1956), General Insurance Business Nationalisation or GIBNA Act and the IRDA Act (1999).

"As per the LIC Act, the corporation requires just Rs 5 crore as paid-up capital. The Bill will amend the requirement to Rs 100 crore to place it on par with other private players," Mr Chaturvedi said.

He was speaking to newspersons on the sidelines of a Risk Summit organised by Asia Insurance Post.

The new Bill will also allow for hike in FDI stake in private insurance companies to 49 per cent from 26 per cent.

Besides, it will modify clauses in other acts. For instance, as per Section 25 of the GIBNA Act (1972), all property, vessels and aircraft registered in the country and which involve foreign reinsurance require Government permission. Mr Chaturvedi said that the Bill would do away with this provision.

Instead, owners of property, aircraft and ships will now have to approach the IRDA for permission.

The Finance Ministry is also looking at allowing foreign reinsurers to set up branches in India. Currently, reinsurers have liaison offices.

Mr Chaturvedi said that the Ministry was looking for a middle path on the issue of a grievance redressal mechanism.

"The Law Commission had recommended a grievance redressal authority in every district, but that may not be feasible as it involves a lot of expenditure. The IRDA is not in favour of it."

The views of the IRDA, Law Commission, KP Narasimhan Committee, Life Insurance Council and the General Insurance Council have been considered while framing the Bill, Mr Chaturvedi said.

The comprehensive bill on insurance is likely to be introduced in the winter session of Parliament.

Speaking at the seminar, Ms Shikha Sharma, MD, ICICI Prudential, said that in the past five years, around Rs 6,000 crore has gone into the insurance industry to sustain the current growth rate. More capital would be required, she added.

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