Page 23 - India Insurance Report 2023- BIMTECH

India Insurance Report - Series II 11

with a new Non-Judicial Member (preferably a technical person from the insurance domain), along with
the existing Judicial Member. This will help the appellate regime get better traction.

e. The Foreign Investment Ceiling – time to allow 100% FDI

The issue should be looked at strategically from a reformed perspective; incremental reform is
increasingly incapable of coping with the requirement of providing an inclusive and fully insurance
penetrated India. A decisive and new approach to India’s financial architecture should allow 100% FDI
for insurance and reinsurance companies. The issues that need to be tackled frontally would include:

a) Systemic worries are best met through robust regulations. The Geneva Association’s Insurance and
Resolution in Light of the Systemic Risk Debate, February 2012 paper, points out that while insurance
failures and subsequent wind-downs, of course, happen, they generally have no potential to disrupt
the financial system. As experience in all relevant jurisdictions shows, specific insurance resolution
processes are well established, tested and applied consistently to all insurers. It is only when insurance
and reinsurance companies engage in activities outside of the core insurance business, specifically in
banking-like potentially risky activities, that risk to the financial system may arise if left unmanaged
and conducted massively and under inadequate supervision;

b) The ‘Indian owned and controlled’ shouldn’t be the dominant priority especially when it is pitted
against the more pressing need to improve insurance penetration/density and bring the global best
practices into the Indian market. Once India is regulated, it shall still be an ‘Indian entity’
notwithstanding 100% FDI and will still benefit India and Indians. management. A probabilistic,
performance-based approach - entertaining the evolution of new economic or social scenarios, new
technologies and new business models - is required to future-proof regulation and the technologies
deployed. Moreover, financial inclusion is a critical issue. This necessitates a continued push to the
digital economy with an enabling e-commerce ecosystem and the adaptation of laws and institutions
to the digital revolution in areas such as competition policy, regulatory regimes, innovation
ecosystems, workforce development, social protection frameworks, and tax policies.

f. (5A) “Class of Insurance Business”

“Class of insurance business” must refer to the class of life insurance or the class of general insurance
business or the class of health insurance business or the class of re-insurance business, as specified by the
Authority.

The primary legislation, i.e., the Insurance Laws (Amendment) Act, 2022, must not include any
“sub-classes” as these must be subject to secondary legislation/regulations.

g. Defining Insurer and Reinsurer

An “insurer” must mean a person who carries on an insurance business, and a “reinsurer” means a