A bill to amend the general insurance law to allow the government to pare its stake in state-owned insurers was introduced in the Lok Sabha by Finance Minister Nirmala Sitharaman. The insurance-sector Bill is widely seen as a move to privatise state-run insurance companies, following the finance minister’s budget 2021-22 announcement.
Introducing the General Insurance Business (Nationalisation) Amendment Bill, 2021, the minister said its passage will help generate required resources from the Indian markets so that public sector general insurers can design innovative products.
As per the statement of objects and reasons of The General Insurance Business (Nationalisation) Amendment Bill, 2021, it seeks to remove the requirement that the central government holds not less than 51 per cent of the equity capital in a specified insurer. Another provision ensures that the 1972 Act stops applying to insurers on and from the date the Centre ceases to have control over them.
The Bill also makes a director, who is not a whole-time director, liable only for acts of omission or commission committed with his knowledge and connivance by the insurer.
With a view to provide for greater private participation in the public sector insurance companies and to enhance insurance penetration and social protection and better secure the interests of policyholders and contribute to faster growth of the economy, it has become necessary to amend certain provisions of the Act, as per the bill.
As of date, there are four general insurance companies in the public sector – National Insurance Company Limited, New India Assurance Company Limited, Oriental Insurance Company Limited and the United India Insurance Company Limited. Now, one of these will be privatised for which the government is yet to finalise the name.