What is General Insurance Business Bill; President Kovind grants assent to amend insurance law [Explained]

President Ramnath Kovind on Friday gave his assent to General Insurance Business (Nationalisation) Amendment Act, 2021 which had introduced new provisions as well as amended General Insurance Business (Nationalisation) Act, 1972. The act will allow the public sector insurance businesses regulated by the 1972 Act to be privatized. Apart from privatization, the act's stated goals include increasing insurance sector coverage, providing social safety through better protecting policyholder rights, and promoting faster economic growth.

Here are some salient features of the Act

• It aims to do away with the need that the central government owns at least 51% of the stock capital in a specific insurer.
• It classifies general insurance as fire, marine, or other types of insurance.
• It eliminates capital redemption and annuity from the definition for some firms.
• Capital redemption insurance entails the insurer paying a lump sum of money to the beneficiary on a predetermined date after the beneficiary has paid premiums on a regular basis.
• Certain types of insurance, such as annuity insurance, pay the beneficiary over time.
• From the date on which the central government relinquishes control of the insurer, it will not apply to the specified insurers. Here, control is defined as:
  • The authority to appoint a majority of the directors of a particular insurer.
  • To be able to make decisions about its management or policies.
• It gives the central government the authority to notify workers of selected insurers about their terms and conditions of employment.
• It states that schemes devised by the central government in this regard shall be regarded as implemented by the insurer.
• The insurer's board of directors has the authority to alter or create new policies.
  

  

Some concerns around this Act

However, there have been some around the act. There have been apprehensions that it will have an impact on the country's insurance industry as well as employees of the General Insurance Company. It's also been argued that it could lead to the complete privatization of general insurance businesses. Privatization will open Pandora's Box, putting 30 crore policyholders in jeopardy.