SABKA BIMA SABKI RAKSHA (AMENDMENT OF INSURANCE LAWS) BILL

NEWS

• The Rajya Sabha passed the Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Bill, a day after its approval by the Lok Sabha.
• The Bill allows 100% Foreign Direct Investment (FDI) in the Indian insurance sector, marking a major reform in financial services.
• Alongside, the House also cleared the Repealing and Amending Bill, annulling 71 obsolete laws.

HIGHLIGHTS

Key Provisions of the Insurance Bill

• Permits 100% FDI in insurance companies, replacing the earlier cap of 74%.
• Ensures that insurance premiums collected in India remain within the country.
• Mandates foreign insurers’ participation in social sector schemes and government welfare programmes.
• Strengthens the regulatory framework under the Insurance Regulatory and Development Authority of India (IRDAI).

Government’s Rationale

• According to Finance Minister Nirmala Sitharaman:
  • Higher FDI will attract global insurers who struggled to find joint venture partners.
  • Increased competition will lead to better products and lower premiums.
  • Foreign insurers will share responsibility for inclusive insurance coverage.

Opposition’s Concerns

• Demand to send the Bill to a Select Committee, citing its far-reaching impact.
• Issues raised include:
  • Data privacy risks, especially misuse of PAN and Aadhaar details.
  • Possibility of profit repatriation and weakening of domestic public sector insurers.
  • Concerns over excessive foreign control in a strategic sector.

Repealing and Amending Bill

• Repeals 71 outdated and redundant laws, including colonial-era legislation.
• Aims to promote ease of living and ease of doing business.
• Part of broader legal reforms to modernise India’s statute framework.

Significance for India

• Enhances India’s attractiveness as an investment destination.
• Supports insurance penetration and financial inclusion.
• Reflects a shift towards liberalisation with regulatory safeguards.

Key Benefits Highlighted:

• Higher capital inflows to support growth in life, health, and general insurance.
• Increased competition leading to innovative products, better service quality, and use of global best practices.
• Deeper insurance penetration, improving financial security and economic resilience.
• Job creation across underwriting, sales, claims, and allied services.
• Potential for better technology, improved risk management, and lower premiums for customers.