Page 50 - Insurance Times Octoberr 2022

getting listed. The insurance regulator should take a page With the ease of entry capital norms, sources said, there
from RBI that allows stake dilution by promoters of private could be entry of companies focussed on micro insurance,
banks. Lifting the bar on M&A activity involving a agriculture insurance or insurance firms with regional ap-
noninsurance company is in order. It can help insurers build proach.
capabilities by acquiring startups.
So for them, the solvency margin requirement would also
Mergers will result in more effective use of capital to sup- be different but without compromising on policyholders'
port the insurers' solvency margin requirements. Consoli- interest, the sources said.
dation will help increase insurance penetration into India's
Entry of more players would not only push penetration but
hinterland. Clear regulatory norms are required for policy-
result in greater job creation in the country.
holders to have trust in insurers.
Presently, there are 24 life insurance companies and 31 non-
FinMin mulls changes in insurance laws life or general insurance firms, including specialised players
like the Agriculture Insurance Company of India Ltd and
to boost penetration
ECGC Limited.
The finance ministry is contemplating changes in insurance
Last year, the government brought an amendment in the
laws, including reduction in minimum capital requirement,
Insurance Act to allow increasing foreign holding in insur-
with a view to increasing the insurance penetration in the
ers from 49 per cent to 74 per cent. Besides, Parliament
country.
passed the General Insurance Business (Nationalisation)
Insurance penetration in India increased from 3.76 per cent
Amendment Bill, 2021, allowing the central government to
in 2019-20 to 4.20 per cent in 2020-21, registering a growth
pare stake to less than 51 per cent of the equity capital in
of 11.70 per cent. Insurance penetration measured as the
a specified insurer, paving the way for privatisation.
percentage of insurance premium to GDP witnessed hand-
In 2015, the Insurance Act was amended for raising the
some growth during the year, mainly due to the outbreak
foreign investment cap from 26 per cent to 49 per cent. All
of COVID-19.
these amendments since privatisation of the insurance sec-
The ministry is doing a comprehensive review of the Insur-
tor have led to exponential growth.
ance Act, 1938 and also looking at making relevant changes
to help push growth of the sector, sources said, adding the According to a study, India is likely to become the sixth larg-
process is at a preliminary stage. est insurance market in the world in the next 10 years, sup-
ported by regulatory push and rapid economic expansion.
One of the provisions being considered is lowering the mini-
mum capital requirement of Rs 100 crore for setting up an Total insurance premiums in India will grow by an average
insurance business, the sources said. 14 per cent per annum in nominal local currency terms over
the next decade, making India the sixth largest in terms of
Easing capital requirement would allow entry of differenti-
total premium volume by 2032 from 10th largest in 2021.
ated insurance companies like in the banking sector, which
has categories like universal bank, small finance bank and Both life and non-life insurers collected a premium of Rs 8.2
payments bank. lakh crore during 2020-21.

The Centre has decided to expand health insurance coverage for informal sanitation workers to expand its outreach
to grassroot-level workers through government schemes. The Centre has decided to bring these workers, mostly
involved in sanitation work like septic tank cleaning and casual sanitation work, under the Pradhan Mantri Jan Arogya
Yojana (PM-JAY) or Ayushman Bharat. The scheme provides health cover of '5 lakh per family per year for secondary
and tertiary care hospitalisation to economically weaker sections. The government has decided that in case an infor-
mal sanitation worker is not in the beneficiary list, the government would pay the premium to bring him and his
family under the ambit of the PM-JAY. The premium will be funded from the ministry of social justice and
empowerment's new scheme -- the National Action for Mechanised Sanitation Ecosystem (NAMASTE).
The move comes after recent ground visits revealed how casual workers, specifically sanitation workers, had not
tapped into the government schemes due to lack of awareness. On a recent visit to Meerut, ministry officials re-
ported that out of 42 sanitation workers the team interacted with to generate awareness, only one worker was a
beneficiary of PM-JAY and the remaining did not have access.

50 The Insurance Times, October 2022