Insurance Penetration to rural and social sectors is marked by high risk and hence more dynamic and efficient risk management systems are crucial while innovation is needed not just in terms of insurance products but also in ways of distributing them. In addition, use of better technologies right from issuance to servicing of Insurance services is also crucial for long term growth of Insurance sector in India.

Insurance industry is witnessing the transformation of insurance agents from mere intermediaries to financial advisors. Greater foreign investments would help in training and skills upgradation of the agents. Well trained agents would be better equipped to convince the customers about the benefits of insurance besides contributing to simplifying the procedure. Moreover, there is a shortage of expertise (skills) in the Indian insurance industry (e.g. underwriting, actuarial, claims management, data standardization etc.) Raising the FDI cap will enable expertise (skills) and know how transfer that are generally not available under the current regime.

While the rural and social sector obligations set by IRDA have been met by the Insurance companies, the untapped potential of these sectors also calls for changes in regulations to facilitate movement towards an era of electronic policy issuance and dematerialization. This will reduce the cost of operations and would facilitate address logistical difficulties through use of electronic distribution channels via mobile phone and broadband technologies.

While broadly, welcoming the Insurance Laws (amendment) Bill, 2008, CII said that a few amendments need to be re examined such as the value of penalties proposed in case of failure to comply with Section 32B, 32C and 32D may be reduced to Rs 2 lakhs as the upper limit and the higher limit on penalty for contravention of provisions relating to investment of controlled fund or assets may be brought down to Rs. 5 Crs instead of Rs. 25 crores.

CII has also suggested that non-executive Directors of a Corporate Agent may be permitted to be the Director/s of Life Insurance Company. This would help regularize many cases where the promoter companies of the Insurance companies have their own Corporate Agency like banks and finance companies.

On the insertion of a new definition of ‘health insurance business’ in the proposed bill to include long term health policies, Personal Accident and Travel Policies etc., CII has pointed out that the term “Health Insurance” has not been included in the definition of General Insurance and Life Insurance. Under this circumstance, CII has sought for a clarification in the Bill whether the Insurance companies registered with IRDA for conducting General and Life Insurance business shall be able to do “Health Insurance” under their existing license.