Amendment in Insurance Business Bill will give better options to the insurers

The General Insurance Business (Nationalisation) Amendment Bill, 2021, introduced by the government, has been passed by the Lok Sabha with the objective of making it easier for public sector insurance companies to increase business and mobilize resources. However, opposition parties and workers’ unions are opposing this decision. Let us know why this decision is being opposed and how will this move benefit the general insured?

Economic affairs expert Yogendra Kapoor said that this is a very positive step taken by the government. This will not only increase the competition among the companies but will also make it possible for the common customers to get insurance products with more convenience. New technology and better management in companies will also increase the ease of claim settlement of customers. Along with this, the way for companies to bring IPO and FPO will also be cleared, so that these companies will have an opportunity to raise money from the market. At the same time, FDI will also benefit on a large scale in this sector.

Why oppose the bill?
Terming the bill as anti-people and anti-national, Congress leader Adhir Ranjan Chowdhury said the government was selling the age-old heritage. Finance Minister Nirmala Sitharaman categorically rejected the allegations of Adhir Ranjan saying that he is making baseless allegations. The government is not taking away anyone’s rights through this bill. People are being misled by telling lies.

Clear the way to increase private stake
After the General Insurance Business (Nationalisation) Amendment Bill, 2021, the way will be cleared for increasing private stake in public sector insurance companies in the country. This will be possible in all those companies where the government wants to reduce its stake below 51 percent. It also wants to hand over control of the company’s management to the potential buyer.

The obligation to share more than 51% is over
After this change, the section of the 1972 Act which was already in force, which required holding of more than 51 per cent stake in public sector general insurance business companies will be done away with. When this happened, the control over the management also remained with the government. After this bill, it will be easier to sell stake in National Insurance Company, New India Assurance Company, Oriental Insurance Company and United India Insurance Company. Under the 1972 Act, the General Insurance Corporation i.e. GIC was established and the National Insurance Company, New India Assurance Company, Oriental Insurance Company and United India Insurance Company were reorganized therein. In 2002, it was amended again so that the control of these four companies of GIC could be given to the central government.

Argument in favor of government’s decision
The Finance Minister says that resources are necessary for the rapid growth of these insurance companies and they can get both money and technology from the private sector. The General Insurance Business Nationalization Act is being amended through this bill. The objectives and reasons for the Bill are to provide for greater private participation in public sector insurance companies, increase insurance access, better protect the social protection and interests of policyholders and contribute to the rapid growth of the economy. It became necessary to amend certain provisions of the Act. The government is engaged in the exercise of selecting an insurance company for privatization, which was announced by Finance Minister Nirmala Sitharaman in the budget.