Budget 2023: Insurance sector set to witness major changes - key details
Budget 2023: According to the report, the Budget Insurance Amendment Bill can be introduced in the upcoming Budget Session of Parliament which is being prepared by the Department of Financial Services (DFS) in collaboration with the Insurance Regulatory and Development Authority (IRDA).
Budget 2023: The insurance sector in India is likely to witness some major changes this year. Experts believe that legal and regulatory changes proposed/made will have far-reaching impact. According to a Zee Business report, there could be several changes for the insurance sector in the upcoming Union Budget 2023.
According to the report, the Budget Insurance Amendment Bill can be introduced in the upcoming Budget Session of Parliament which is being prepared by the Department of Financial Services (DFS) in collaboration with the Insurance Regulatory and Development Authority (IRDA).
As per sources, DFS and IRDA are considering the following changes:
1. Capital requirement
As per the current norms, an insurance company is required to have a minimum paid-up capital of Rs 100 crore to start business. Sources say that the government could ease the minimum capital requirement .
2. Solvency Ratio
As of now, an insurance company requires to maintain a minimum solvency ratio of 1.5. Sources say that the government could reduce the solvency ratio.
Solvency ratio indicates the financial strength of an insurer. It provides insight into the company's cash flow and whether it is capable of meeting liabilities.
3. Composite Scheme
The DFS and IRDA are actively considering a composite scheme for insurers. In the budget, the government could pave the way for the issue of composite licence to insurance companies. This will allow insurance companies to sell multiple insurance products through one common licence. This has been one of the key demands from the key industry players.
According to the current norms, insurance companies require separate licences for selling general, life and health insurance products.
4. Licence Renewal
As of now, intermediaries have to renew their licence annually. Sources say that the government could relax this rule by introducing one-time licencing rule.
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