Sector Update: Insurance
After 7 years wait, Indian parliament has approved long pending
insurance bill. According to insurance bill, now FDI has been raised to 49%
from 26% with Indian ownership control. Penalty for non compliance raised to 25
crore. It is Modi govt’s first major reform sign. Industry expert hopes that
this insurance bill help bring in over Rs 50,000 crore in fresh capital which
will stimulate the insurance sector.
From 1st April 2015, the premium rates for third party motor
insurance cover has been raised after issuing new draft by IRDA. IRDA is also
planning new investment norms for general insurance companies. According to new
norms, investment limit in securities other than those approved would be now
10% earlier it was 25% of total premium collected in a fiscal. It may reduce
the earning of general insurance companies.
The Bombay High Court has asked to IRDA to ensure that insurance
companies should not involve TPA in the claim settlement. As per ruling of
health insurance, allowing or rejecting claim should decide by insurance
companies not by the TPA.
According to British Medical Journal, India’s private healthcare
sector treating patients as revenue generators. Doctors get Rs 30,000 to 40,000
to refer patients for angioplasty. Unnecessary tests are being carried out and
fabricated reports were generated. Large sums were paid for the same only to
fill the pockets of referring doctors and pathologists. There is serious need
for stringent, transparent and mandatory regulation.
IRDA said that insurance companies can appoint individual agents
on their own from 1st April 2015. As per current practice, IRDA grants license
to a person to become an agent of insurance company. After the new norms, whole
licensing systems will go.
To bring more transparency, IRDA is planning to treat health
insurance as a stand alone segment. As per current rule health insurance come
under non life insurance category. Now, separate regulation will be made by
IRDA for medical insurance.
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Warm regards,
Arvind Trivedi
Certified Financial Planner
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