The shares of General Insurance Corporation of India (GIC) and New India Assurance Company Ltd (NIAC) gained 11.97% and 7.91%, respectively by 01:23 PM on Monday. In fact, the shares of GIC reached a fresh 52-week high of ₹ 188.15 apiece, on the National Stock Exchange (NSE). A slew of amendments to insurance laws is on the cards.
The state-owned insurers’ shares have been on an uptrend. GIC gained 39.33% in the past month, while NIAC gained 44.06% during the same period. In comparison, the Sensex gained marginally (0.72%) in the past month.
According to a Business Standard report, the finance ministry has proposed a host of amendments to the insurance laws. These include granting insurers a composite licence to allow them to sell different financial products and increasing the retirement age of the chairman and whole-time members of the Insurance Regulatory and Development Authority of India (IRDAI).
In addition, the Department of Financial Services has also suggested that insurers can operate in multiple lines of business (general, life, and health), without having to seek separate licences from the regulator for each business, provided they meet the minimum capital requirements. This would require an amendment to the Insurance Act, 1938.
Further, it has suggested that insurance companies should be permitted to distribute other financial products (for example, mutual funds). It has also suggested doing away with the rigid requirements of capital for setting up an insurance company. Many of these suggestions were part of the recommendations that the IRDAI had sent to the government ahead of the upcoming Budget session.
The Department of Financial Services said that these amendments would enhance the financial security of policyholders, promote their interests, and improve their returns. Moreover, it would lead to the entry of more players in the insurance market, leading to economic growth and employment generation.
Written by Simran Bafna
