LS okays amendment in General Insurance Business (Nationalisation) Act
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The Lok Sabha on Monday approved amendments to General Insurance Business (Nationalisation) Act, 1972. This will help the government shed its shareholding in public sector general insurance companies.
Meanwhile, Finance Minister Nirmala Sitharaman has assured that the amended Bill will not take away the rights of anybody. This remark is in response to the allegation that the government is privatising insurance companies that will be against the interest of employees and policyholders.
Also read: Govt moves to shed stake in a general insurance co
“All these allegations are baseless. The government is not taking away rights of anyone. Private sector insurance companies are raising money from public and with the help of that, providing insurance products at lower premium,” she said while responding to allegations on the Bill from the opposition bench. Later the Bill got passed with voice vote.
Earlier on July 30, while introducing the Bill, Sitharaman had categorically said that apprehensions mentioned by the members are not well-founded at all. “What we are trying to in this is not to privatise. We are bringing some enabling provision so that the government can bring in public participation, Indian citizens, the common people’s participation in the general insurance companies,” she had said.
The amendment is a follow-up to the Budget announcement in which Sitharaman proposed ‘privatisation’ of one general Insurance company in the current financial year. On July 30, she said a public-private participation in general insurance industry will help get more resources which will bring in better technology infusion and also enable faster growth of such companies.
Three amendments
The Bill proposes three amendments. First one aims “to omit the proviso to section 10B of the Act so as to remove the requirement that the Central Government holds not less than 51 per cent. of the equity capital in a specified insurer”. The second one will insert a new section 24B “providing for cessation of application of the Act to such specified insurer on and from the date on which the Central Government ceases to have control over it.”
And the third one will insert “a new section 31A providing for liability of a director of specified insurer, who is not a whole-time director, in respect of such acts of omission or commission of the specified insurer which has been committed with his knowledge and with his consent.”
“With a view to providing for greater private participation in the public sector insurance companies and to enhance insurance penetration and social protection and better secure the interests of policy holders and contribute to faster growth of the economy, it has become necessary to amend certain provisions of the Act,” statement of objects and reasons of the Bill said.
As on 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, Besides these, there is one re-insurer, General Insurance Corporation and one specialised one for agriculture insurance.
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