After a lot of deliberation, the revolutionary Insurance Bill has been passed by the Parliament. It will be considered as an act when the President signs it. The insurance sector is predicted to receive a major boost owing to this decision, as the bill propagates an increase in overseas investment cap in insurance from 26% to 49%. Many insurance companies are in talks with their overseas partners to increase the foreign stake. However, the bill also comes with a rider empowering Indian companies with the authority to manage the enterprise.
The bill is also set to increase Insurance Regulatory and Development Authority of India's (IRDA) regulatory powers. The IRDA will have more powers to levy hefty penalties, impose a restriction on expense management, decide agent's salary and disallow insurance companies to repudiate claims after three policy years.
IRDA's powers will be directed towards ensuring that the end users benefit from these changes. Better salary for insurance agents can curb mis-selling for individual gain by the agents. Mis-selling will attract a fine of
` 1 crore. Non-compliance by companies will lead to a fine of `25 crores as compared to the current paltry amount of ` 5 lakh.