New Delhi: Insurance policy holders can look forward to a series of changes with the central government giving its go-ahead to 49 percent Foreign Direct Investment (FDI) in insurance on Thursday. The proposed bill promises that it would ensure that all policyholders’ funds are safe.

Keeping in mind the interests of the insurance policy holders, insurance regulator — Insurance Regulatory and Development Authority (IRDA) has proposed various safeguards for the policy holders while changing rules to comply with the Centre’s recent decisions on life insurance.

IRDA has also to see that the Reserve Bank of India (RBI) permit banks to become insurance brokers. The RBI has allowed banks to act only as corporate agents or referral partners.

Perhaps that is why the Insurance Laws (Amendment) Bill, 2008 proposes that foreign reinsurers will be permitted to open branches only for reinsurance business in India and cannot invest the funds of policyholders outside India.

The period, during which a policy can be repudiated on any ground, including misstatement of facts has been confined to three years from the commencement of the policy and no policy would be called in question on ground of misstatement after three years.

Entry of new foreign players would also result in innovation and more choices for consumers, creating almost a win-win-situation, say experts.

Notably, it is being said that the proposal to keep foreign equity cap at 49 percent as provided in the Insurance Laws (Amendment) Bill, 2008 against the 26 percent would help in capital inflows worth a whopping Rs 20,000 crore into India.

Also insurance majors such as Reliance Life, Bharti AXA, Bajaj Allaince, ING Vysya, Birla Sun Life, Aviva and Kotak Mahindra Old Mutual would welcome the equity raised by foreign players.

Aiming at a better health insurance sector, health insurance in India, the capital requirement for a health insurance company has been proposed at Rs 50 crore instead of Rs 100 crore for general insurance companies.

The definition of 'health insurance business' has been revised so that health insurance policies would cover sickness benefits on account of domestic as well as international travel.

Also, a separate Motor Vehicle Insurance and Compensation Legislation is being proposed by the Centre.

(JPN/Bureau)

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