December 10, 2023

WHY IN THE NEWS?

Lok Sabha passed the “General Insurance Business (Nationalisation) Amendment Bill.

About:

  • General Insurance Business (Nationalisation) Amendment Bill, 2021 will allow the government to lower down its stake in State-owned general insurance companies and generate required resources.
  • It will also help public sector general insurers design innovative products.

Amendments to the bill

  • Proposed amendments to the Bill meant for removing the mandatory requirement of Central government holding not less than 51 per cent of the equity capital in a specified insurer.
  • As per the Bill, amendments had become necessary to attract larger private participation in public sector insurance companies, enhance penetration of the insurance sector and provide social protection by securing the interests of policyholders.

Background

This bill was passed in line with the government’s privatization drive. Finance minister Nirmala Sitharaman has announced ambitious privatisation agenda, including two public sector banks and one general insurance company in her budget speech for 2021-2022. Accordingly, among four public sector general insurance companies namely, National Insurance Company Limited, Oriental Insurance Company Limited, New India Assurance Company Limited and United India Insurance Company Limited; the government will dilute its shareholding in one company. The name of the company is yet to be finalised.

General Insurance Business (Nationalisation) Amendment Bill, 2021

This bill was introduced in Lok Sabha on July 30, 2021.  It seeks to amend General Insurance Business (Nationalisation) Act, 1972 that was enacted to nationalise all private companies undertaking general insurance business.  Bill provides for greater private sector participation in public sector insurance companies that are regulated under the Act of 1972. Bill has removed the government shareholding threshold of 51% in specified insurers.   Bill has also changed the definition of general insurance business and transferred the power of appointing the majority of directors of specified insurer & power over its management or policy decision from the government

Print Friendly, PDF & Email

© 2023 Civilstap Himachal Design & Development