The global financial crisis may have hit the world’s biggest insurance players severely. But the UPA government is undeterred by the recent turn of events and is hoping to carry forward its financial sector reform agenda, beginning with a hike in foreign direct investment (FDI) limit in the insurance business along with a slew of other reforms.

The Cabinet on Thursday is expected to take up for approval the Insurance Laws (Amendment) Bill that aims to increase the FDI limit in domestic insurance companies to 49 per cent from the existing 26 per cent. The UPA expects to table it in the forthcoming session of Parliament beginning October 17.

The Bill was finally cleared by a GoM led by external affairs minister Pranab Mukherjee last month, over two years after the matter was first referred to it. The GoM has also recommended 10 new provisions in the draft Bill.

Besides increasing FDI, the 60-page draft Bill proposes nearly 120 amendments to insurance laws, including amendments to the Insurance Act of 1938, LIC Act of 1956, and IRDA Act of 1999. A key proposal aims to enable foreign reinsurance firms to enter the market. This would benefit firms like Lloyd’s, Munich Re and Swiss Re to get a full branch status in India. Currently state-owned General Insurance Company is the only reinsurer in the country.

(FE)