The Insurance Laws (Amendment) Bill, 2008 which was introduced to the Parliament in December 2008, is yet to be discussed in Parliament despite indications given earlier that the new Lok Sabha in its first session will take up the issue. Generally, the ruling combination is encouraged to introduce reform measures in the first two years of the tenure after the Lok Sabha elections since this is considered a safe period for taking measures which have an adverse impact on the common voters. But the UPA2 Government got shaky in the first year of its operation itself as the prices went up so steeply leading to acute discontent among the common masses that the Government could not muster the courage to force the issue of reforms in its immediate economic agenda.

As regards the Insurance Laws (Amendment) Bill, the latest position is that apart from opposition MPs, UPA allies like DMK and Trinamool Congress are also opposed to this Bill, especially the provision stipulating the hiking of foreign equity from the existing 26 per cent to 49 per cent. The opposition parties, especially the BJP and the Left, have already conveyed their opposition to the provisions of the Bill in the earlier meeting of the Standing Committee on Finance of Parliament; it is quite likely that they will take the same position at the next meeting of the SCF.

Earlier, there was a move in the Government that talks should be held with BJP leadership to persuade them to agree to the provisions of the Bill since BJP was in favour of reforms in the insurance sector when it was heading the NDA Government earlier. But the belligerent stance of the BJP towards the ruling party at the moment has led the Finance Minister to give up that plans. Now the Government is waiting for discussions at the SCF meeting, and it is not trying for any understanding with the BJP on the provisions of the Insurance Bill.

Sources say that the Chairman of the SCF Dr. Murli Manohar Joshi is himself strongly opposed to the reforms. And in the last meeting of the SCF in February, when the LIC Amendment Bill was discussed, Dr. Joshi opposed the raising of the minimum capital of the LIC from Rs. 5 crore to Rs. 100 crore; the draft report on the LIC Bill prepared at that meeting will come up for discussion at the next meeting.

CPI MP in the Lok Sabha and a prominent member of the SCF Gurudas Dasgupta said that there is no need for hiking foreign equity when the record of the multi-national insurance companies during the global financial crisis is so dismal. The public sector insurance companies are doing a tremendous job and they should be encouraged rather than allowing more freedom to the foreign companies.

At the industry level, for the first time, global insurers have turned their back on primary general insurers in India by under-subscribing treaty obligations. This means that the general insurance companies in India will have to absorb liabilities themselves and will require more capital. Senior officials said that the under subscriptions were mainly in marine hull, marine cargo and miscellaneous accident categories. This business accounts for almost 20 per cent of India's general insurance. The under subscriptions in all these businesses varied from 25 to 35 per cent and at least 55 per cent of private sector business and 25 per cent of public sector business is ceded to cross-border reinsurers. Reinsurer under subscription, the officials said, is largely on account of low-risk premiums quoted by domestic general insurers. (IPA)