The Amending Act, i.e. the Insurance Laws (Amendment) Act of 2015 (Act no. 5 of 2015) was enacted and provided as the Act of Parliament and it was given assent by the President of India on 20th day of March, 2015. Moreover, this Amending Act was notified on 20th day of March, 2015. This Act is especially enacted to further amend the provisions of the Insurance Act of 1938 (Act no. 4 of 1938), i.e. the Principal Act(1), which was enacted to make provisions for consolidating and amending the law relating to the business of insurance. Moreover, this Amending law is also enacted to amend the provisions of the General Insurance Business (Nationalisation) Act of 1972 (Act no. 57 of 1972)- Principal Act(2) and also to amend the provisions of the Insurance Regulatory and Development Authority Act of 1999 (Act no.41 of 1999)- Principal Act(3).
The present Amending Act is as such offering, in all 108 sections which are divided into Four Chapters, and except its Chapter- I which is dealing with the introductory provisions, the other three Chapters are dividing the provisions for amending the each of above mentioned three Principal Acts. Thus, this present Amending Act was enacted in the Sixty- Sixth year of the republic of India.
There are number of major amendments made through this amending Act in the provisions of the Principal Act(1), in which one can see, firstly, this Amending Act is increasing the foreign investment limit to 49 per cents from 26 per cent. Such limit is increased in relation to the maximum foreign investment, which include the direct and indirect foreign direct investment, and also foreign portfolio investment, which all permitted in the equity shares of an Indian Insurance Company. Secondly, this Amending Act is offering provisions for the vest the Control and ownership of the Indian Insurance Company with the Indian residents, and also it has defined the ownership to mean that the Indian residents should be holding the 50 and more per cents of the equity share capital in such Insurance company. And also for control, this amending Act is defining it as to include the right to appoint majority directors on the board of the company or to control the management or policy decision, like by virtue of the shareholders or management rights or shareholders agreements or voting agreement. Moreover, this amending Act is also amending the provisions of Principal Act to add the situation in which the Public Sector Undertakings in the insurance sector can raise funds from the public, with the prescriptive permissions, however, there is condition in this relation that the Government stake in such entities should not be diluted below 51 per cents.
Further, the health insurance sector has been recognized by this Amending Act, as a distinct sector, however, there is condition that the same recognition will be subject to separate regulation. Moreover, this amending Act is also added few more powers to the Insurance Regulatory and Development Authority of India, wherein, the said authority/ regulator are now be empowered to make rules on matters, such as management fees, commissions and composition of the investment portfolio of the Insurance company. In its amendments, this Amending Law is also offering the permissions favouring the Re- insurance, which was earlier the foreign re- insurance business. Now this Foreign Re- Insurance business is also permitted through the present Amending Act and also this law is also permitting the setting up of the branches of such Foreign Re- Insurance in various parts of India. Moreover, this Amending Act is also defining the expression ‘Re- insurance’ as the insurance of part of risk of one insurer by another insurer, who accepts the risk for a mutually acceptable premium. Also, this Amending Act is offering lots of other amendments in the aforementioned Principal enactments, including the one where it has added the process for appeal, and designated the appellate authority to the Securities Appellate Tribunal for quasi- judicial and administrative rulings of the IRDA.
Read the Bare Act here