LIC Likely To Take a Call On Composite License: Report

The country's largest insurer LIC may take a call on composite licence clause after the passage of Insurance Laws Amendment Bill in Parliament, stated a PTI report citing sources.

As per the proposed Bill, stated in the report, an applicant may apply for registration of one or more classes/sub-classes of insurance business of any category or type of insurer. However, reinsurers are prohibited from seeking registration of any other class of insurance business. A composite license will allow insurers to undertake general and health insurance via a single entity.

Sources said LIC would take a call on composite license and other issues emanating out of passage of the Bill in a comprehensive manner taking into consideration Life Insurance Corporation Act, 1956, said the report. It also added that the Bill, with proposed amendments to the Insurance Act 1938 and Insurance Regulatory and Development Authority Act, 1999, is expected to be tabled in Parliament in the upcoming Budget session starting next month.

As per available reports, the finance ministry has recently circulated for wider consultation the amendment in insurance law, including reduction in minimum capital requirement, with a view to enhancing insurance penetration, improve0 efficiency, and enable product innovation and diversification.

As per the market studies, currently, there are 24 life insurance companies and 31 non-life or general insurance firms, including specialised players like the Agriculture Insurance Company of India Ltd and ECGC Ltd. Last year, the government brought an amendment in the Insurance Act to allow increasing foreign holding in insurers from 49 per cent to 74 per cent.