Reforms to the insurance sector in India: the wait continues
By John Goulios, Biswajit Chatterjee, Daniel Sharma LLM and Joywin Matthew
The winter session of the India parliament concluded on 20 December 2013. Against the backdrop of the slowing growth rate and demands from the investment community for economic reforms, one critical piece of legislation that was expected to be considered by the parliament was the Insurance Laws (Amendment) Bill 2008. The government’s approval to increase the foreign direct investment limit for the insurance sector from 26 per cent to 49 per cent had also given rise to the expectation that the bill would be passed at the winter session of the parliament.
In 2004, the Law Commission recommended a comprehensive reform of the Insurance Act 1938. In 2005, the Narasimhan Committee made further recommendations for changes to the Insurance Act. The bill, which amends the Insurance Act 1938, the General Insurance Business (Nationalisation) Act 1972 and the Insurance Regulatory and Development Authority (IRDA) Act 1999, and incorporates the recommendations of the Law Commission and the Narasimhan Committee, has been up for consideration by the parliament since 2008.
Lack of political consensus has led to yet another hiatus in the passage of the bill into law. Had the bill been passed at the recently concluded session of parliament, it may perhaps have reinforced the message to the global investment community that economic reforms are under way…
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