{"id":7934,"date":"2021-08-25T05:59:10","date_gmt":"2021-08-25T05:59:10","guid":{"rendered":"https:\/\/swaritadvisors.com\/blog\/?p=7934"},"modified":"2021-08-25T05:59:13","modified_gmt":"2021-08-25T05:59:13","slug":"general-insurance-business-nationalisation-amendment-bill-2021","status":"publish","type":"post","link":"https:\/\/swaritadvisors.com\/blog\/general-insurance-business-nationalisation-amendment-bill-2021\/","title":{"rendered":"General Insurance Business (Nationalisation) Amendment Bill, 2021"},"content":{"rendered":"\n<p class=\"has-drop-cap\">On August 11, the <strong><em>General Insurance Business (Nationalisation) Amendment Bill, 2021<\/em><\/strong>, was passed by the Parliament of India. This bill aims to push greater participation in public sector insurers. The bill seeks to remove the necessity that the centre shouldn&#8217;t hold less than 51% of the equity capital in such insurers. It will amend the <strong><em>General Insurance Business (Nationalisation) Act, 1972<\/em><\/strong>. Let&#8217;s understand more about General Insurance Business (Nationalisation) Amendment, 2021.<\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_65 counter-hierarchy ez-toc-counter ez-toc-light-blue ez-toc-container-direction\">\n<p class=\"ez-toc-title\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a3a860f78f5b\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a3a860f78f5b\"  aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/swaritadvisors.com\/blog\/general-insurance-business-nationalisation-amendment-bill-2021\/#Why_the_need_for_an_Amendment\" title=\"Why the need\nfor an Amendment?\">Why the need\nfor an Amendment?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/swaritadvisors.com\/blog\/general-insurance-business-nationalisation-amendment-bill-2021\/#What_is_the_Meaning_of_General_Insurance_Business\" title=\"What is the\nMeaning of General Insurance Business?\">What is the\nMeaning of General Insurance Business?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/swaritadvisors.com\/blog\/general-insurance-business-nationalisation-amendment-bill-2021\/#General_Insurance_Business_Nationalisation_Amendment%E2%80%93_An_Overview\" title=\"General Insurance Business (Nationalisation) Amendment\u2013 An Overview\">General Insurance Business (Nationalisation) Amendment\u2013 An Overview<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/swaritadvisors.com\/blog\/general-insurance-business-nationalisation-amendment-bill-2021\/#Which_Insurers_will_be_affected\" title=\"Which Insurers\nwill be affected?\">Which Insurers\nwill be affected?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/swaritadvisors.com\/blog\/general-insurance-business-nationalisation-amendment-bill-2021\/#What_does_the_Opposition_want\" title=\"What does the\nOpposition want?\">What does the\nOpposition want?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/swaritadvisors.com\/blog\/general-insurance-business-nationalisation-amendment-bill-2021\/#Indian_Insurance_Market\" title=\"Indian\nInsurance Market\">Indian\nInsurance Market<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/swaritadvisors.com\/blog\/general-insurance-business-nationalisation-amendment-bill-2021\/#Advantages_and_Disadvantages_of_the_General_Insurance_Business_Nationalisation_Amendment_Bill_2021\" title=\"Advantages and\nDisadvantages of the General Insurance Business (Nationalisation) Amendment\nBill, 2021\">Advantages and\nDisadvantages of the General Insurance Business (Nationalisation) Amendment\nBill, 2021<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/swaritadvisors.com\/blog\/general-insurance-business-nationalisation-amendment-bill-2021\/#Conclusion\" title=\"Conclusion\">Conclusion<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Why_the_need_for_an_Amendment\"><\/span>Why the need\nfor an Amendment?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>As\nper the Government of India, the need arose to address the following cases:<\/p>\n\n\n\n<ol><li>Increase the level of insurance\npenetration and thereby social protection;<\/li><li>Encourage for higher private\nparticipation in public section insurance companies or entities;<\/li><li>Protect the policyholders\u2019\ninterests in a proper way;<\/li><li>Contribute to the rapid growth\nof the Indian Economy.<\/li><\/ol>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_is_the_Meaning_of_General_Insurance_Business\"><\/span>What is the\nMeaning of General Insurance Business?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The\nAct mentions General Insurance Business as a marine or miscellaneous insurance\nbusiness. It eliminates annuity and capital redemption from the definition.\nCapital redemption insurance consists of the payment of an amount of money on a\nparticular date by the insurer once the recipient pays the premium regularly.\nUnder the definite annuity insurance, the insurer pays the recipient over time.\nThe General Insurance Business (Nationalisation) Amendment Bill, 2021, removes\nthis meaning and mentions the importance provided under the Insurance Act,\n1938. Under Insurance Act, 1938, capital redemption &amp; annuity specific come\nunder the influence of General Insurance Business.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"General_Insurance_Business_Nationalisation_Amendment%E2%80%93_An_Overview\"><\/span>General Insurance Business (Nationalisation) Amendment\u2013 An Overview<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The\nGeneral Insurance Bill seeks to change the <strong><em>General Insurance Business (Nationalisation)\nAct, 1972. <\/em><\/strong>This law handles nationalising all private general insurers\nin the country. Under it, the <strong><em>GIC or General Insurance Corporation <\/em>of\nIndia <\/strong>was established. New India Assurance, Oriental Insurance, National\nInsurance, and United India became its subsidiaries. The Act was changed in\n2002, and the Central Government took over control of the subsidiaries from\nGeneral Insurance Corporation. The new bill seeks to remove the old Act on the\n51% Government holding requirement.<\/p>\n\n\n\n<p><strong><em>The\nbill has sought three main amendments, and you can check the same below:<\/em><\/strong><\/p>\n\n\n\n<ol><li>According to the first amendment,\nit aims to exclude the provision to <strong><em>Section 10B <\/em><\/strong>of the Act, 1972, which\nsays that the shareholding of the Central Government in the specified insurers\nshould be a minimum of 51%;<\/li><li>According to the Second\nAmendment, it seeks to add a new Section 24B providing ending of the\napplication of the Act to such insurer on and from the date on which Central\nGovernment stops to have control over it. Control means the power to assign the\nmajority of directors stated insurer or to have control over its management\n&amp; policy decisions;<\/li><li>According to the third\namendment, it seeks to add a new <strong><em>Section 31A <\/em><\/strong>providing for director\u2019s\nliability of the stated insurer, not being a full-time director, responsible\nfor an act of error or commission committed with their knowledge &amp;\napproval.<\/li><\/ol>\n\n\n\n<p>These\namendments were as per Budget Announcement when the Finance Minister announced\nthat they sought to take up the privatisation of two Public Sector Banks &amp;\na General Insurance Company in the year 2021-22. Further, she said that it\nwould require legislative amendments and planned to set up the amendments in\nthe session itself.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Which_Insurers_will_be_affected\"><\/span>Which Insurers\nwill be affected?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p><strong><em>India\nhas four General Insurers in the public sector, and these are:<\/em><\/strong><\/p>\n\n\n\n<div class=\"wp-block-image\"><figure class=\"aligncenter is-resized\"><img decoding=\"async\" loading=\"lazy\" src=\"https:\/\/swaritadvisors.com\/blog\/wp-content\/uploads\/2021\/08\/image001-24.png\" alt=\"Insurers will be affected by General Insurance Business (Nationalisation) Amendment Bill, 2021\" class=\"wp-image-7938\" width=\"499\" height=\"500\" srcset=\"https:\/\/swaritadvisors.com\/blog\/wp-content\/uploads\/2021\/08\/image001-24.png 998w, https:\/\/swaritadvisors.com\/blog\/wp-content\/uploads\/2021\/08\/image001-24-150x150.png 150w, https:\/\/swaritadvisors.com\/blog\/wp-content\/uploads\/2021\/08\/image001-24-300x300.png 300w, https:\/\/swaritadvisors.com\/blog\/wp-content\/uploads\/2021\/08\/image001-24-768x769.png 768w\" sizes=\"(max-width: 499px) 100vw, 499px\" \/><\/figure><\/div>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_does_the_Opposition_want\"><\/span>What does the\nOpposition want?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The\nGovernment of India has been accused of not following parliamentary rules and\nbulldozing the legislation. Oppositions demand that the bill be referred to a\nselect committee of the House. As per the Opposition, the amended norms are\ngoing to prove damaging to the larger public interest.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Indian_Insurance_Market\"><\/span>Indian\nInsurance Market<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>According to the data shown by the insurance regulatory body <strong><em>IRDAI (Insurance Regulatory and Development Authority of India), <\/em><\/strong>around 25 General <em>Insurance Companies<\/em> observed a 10.8% rise in their collective premium in the January month of 2021 to Rs. 16.247 crores as compared with Rs. 14.663 crore in January month last year.<\/p>\n\n\n\n<p>According\nto the data published by <strong><em>IBEF (India Brand Equity Foundation), <\/em><\/strong>insurance\npenetration in India was observed at 3.76% in the Financial Year 2020. In terms\nof insurance density, its overall density was seen at 78 US dollars in the\nFinancial Year 2020. It declared that the market share of the private sector\ncompanies in the health &amp; general insurance increased from 47.97% in the\nFinancial Year 2019 to 48.03% in the Financial Year 2020.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Advantages_and_Disadvantages_of_the_General_Insurance_Business_Nationalisation_Amendment_Bill_2021\"><\/span>Advantages and\nDisadvantages of the General Insurance Business (Nationalisation) Amendment\nBill, 2021<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>To\nknow the amendments, we need to weigh the advantages and disadvantages of the\nGeneral Insurance Business (Nationalisation) Amendment Bill. Following are the\nadvantages &amp; disadvantages of this bill:<\/p>\n\n\n\n<p><strong>Advantages-<\/strong><\/p>\n\n\n\n<ol><li>The bill intends to bring more\nprivate capital in the General Insurance Business, and it creates a part of the\nGovernments\u2019 strategy to open more &amp; more sectors for private participation\n&amp; boost efficiency;<\/li><li>It can help in bringing vital\nresources;<\/li><li>It will allow public sector\ngeneral insurers to design innovative products &amp; services;<\/li><li>It can include the share of\nIndia in the international insurance market.<\/li><\/ol>\n\n\n\n<p><strong>Disadvantages-<\/strong><\/p>\n\n\n\n<ol><li>The bill intends for\nprivatisation, and total privatisation of the General Insurance Companies can\ncause proprietorship to be with a few capitalists only;<\/li><li>Another disadvantage to be\naware of is that people will have trust issues as they trust public companies\nmore;<\/li><li>After this bill is implemented,\nthe Government may suffer money loss in the form of dividends considering that\nthe share of the Government will be reduced in the General Insurance Business.<\/li><\/ol>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Conclusion\"><\/span>Conclusion<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The General Insurance Business (Nationalisation) Amendment Bill, 2021, has been introduced by the parliament, and it changes the <strong><em>General Insurance Business Act 1972<\/em><\/strong><sup><a href=\"https:\/\/legislative.gov.in\/sites\/default\/files\/A1972-57.pdf\" class=\"text-primary\"><strong>[1]<\/strong><\/a><\/sup>, which was passed to nationalise private companies or entities undertaking General Insurance Business in India. As we mentioned above, such amendments are in line with the Budget announcement when the Finance Minister of India announced that they sought to privatise two Public Sector Banks and General Insurance companies in the year 2021-22.<\/p>\n\n\n\n<p class=\"text-left\"><b>Read our article<\/b>:<mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/swaritadvisors.com\/blog\/key-features-of-micro-insurance-companies\/\">What are the Key Features of Micro Insurance Companies?<\/a><\/mark><\/p>\n\n\n\n<p><\/p>\n","protected":false},"excerpt":{"rendered":"<p>On August 11, the General Insurance Business (Nationalisation) Amendment Bill, 2021, was passed by the Parliament of India. This bill aims to push greater participation in public sector insurers. The bill seeks to remove the necessity that the centre shouldn&#8217;t hold less than 51% of the equity capital in such insurers. It will amend the [&hellip;]<\/p>\n","protected":false},"author":6,"featured_media":7937,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[43],"tags":[824],"acf":[],"_links":{"self":[{"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/posts\/7934"}],"collection":[{"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/users\/6"}],"replies":[{"embeddable":true,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/comments?post=7934"}],"version-history":[{"count":19,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/posts\/7934\/revisions"}],"predecessor-version":[{"id":7960,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/posts\/7934\/revisions\/7960"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/media\/7937"}],"wp:attachment":[{"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/media?parent=7934"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/categories?post=7934"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/tags?post=7934"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}