Govt notifies rules pertaining to amended insurance laws

The government has notified rules pertaining to amended insurance laws that seek to raise foreign direct investment (FDI) limit in the insurance sector to 74 per cent from the current 49 per cent. According to a gazatte notification, these rules may be called the Indian Insurance Companies (Foreign Investment) Amendment Rules, 2021.

It said ‘Total foreign investment in an Indian insurance company shall mean the sum total of direct and indirect foreign investment by foreign investors in such company, calculated in such manner as is specified in regulations made by the Authority (IRDAI) with regard to registration of Indian insurance companies’. The Insurance (Amendment) Bill, 2021, was passed by Parliament in March. The Bill amended the Insurance Act, 1938.

It said ‘In the principal rules, in rule 3, for the word ‘forty-nine’, the word ‘seventy-four’ shall be substituted’. FDI in the insurance sector was increased from 26 per cent to 49 per cent in 2015. The announcement for hiking the FDI limit was made in the Union Budget 2021-22 on February 1. The new arrangement is expected to benefit 23 private life insurers, 21 private non-life insurers and seven specialised private health insurance companies.