Zee Media Bureau
New Delhi: Lok Sabha on Wednesday passed the Insurance Bill to replace an ordinance in this regard.
The Bill seeks to raise foreign investment cap to 49 percent in the insurance sector and provides for imprisonment of up to 10 years for selling policies without registration with the regulator IRDA.
The Insurance Laws (Amendment) Bill, 2015, will also allow PSU general insurers to raise funds from the capital market and provides for increased penalty to deter multilevel marketing of insurance products.
Under the new provisions, the Life Insurance Council and the General Insurance Council would act as self-regulating bodies for the sector.
The Bill seeks to raise foreign investment limit in the sector from 26 percent to 49 percent. While up to 26 percent will be under the automatic route, the remaining would be cleared through the FIPB.
The Bill, which provides for a penalty of up to Rs 25 crore with imprisonment of up to 10 years for carrying out the business of insurance without obtaining IRDA certificate, has also raised the penalty for other offences.
As per the Bill, an insurer will be prohibited from challenging the life insurance policy on any ground after a period of three years of selling it.
It also allows insurers to raise capital through new instruments and do away with the restrictions on divestment of stake by Indian promoters of the joint venture.
The Bill seeks to put a minimum capital requirement for health insurers at Rs 100 crore.
