Bill imposes ₹5 crore penalty for unauthorized foreign insurance

This Bill amends existing insurance laws to update definitions, regulate the registration and conduct of insurers, and introduce specific rules for health insurance and foreign investment. It aims to strengthen the regulatory framework by granting the Insurance Regulatory and Development Authority (IRDAI) broader powers to suspend or cancel insurer registrations and by setting minimum capital requirements.

The law affects Indian insurance companies, insurance co-operative societies, statutory bodies established by Parliament, foreign companies engaged in re-insurance through branches in India, and any person or entity seeking to take out or renew insurance policies for property in India.

• Substitutes references to the Indian Companies Act, 1913 with the Companies Act, 1956 throughout the Insurance Act, 1938.
• Defines 'health insurance business' to include sickness, medical, surgical, hospital expense, long-term care, overseas travel, and personal accident cover.
• Limits foreign equity holdings in Indian insurance companies to a maximum of 49% of paid-up equity capital.
• Sets minimum paid-up capital requirements of Rs. 100 crores for life/general insurance and Rs. 50 crores for health insurance business.
• Prohibits insurers from carrying on business without registration, with exceptions for certain entities in Special Economic Zones (SEZs) and notified foreign re-insurers.
• Prohibits insuring property in India (except in SEZs or registered ships/aircraft) with foreign insurers without prior permission from the Authority.
• Imposes a penalty of up to Rs. 5 crore for contravening the prohibition on insuring Indian property with foreign insurers without permission.
• Allows appeals against registration refusals to the Securities Appellate Tribunal within 30 days.
• Grants the Authority power to suspend or cancel registration for various reasons, including non-compliance with asset-liability requirements, insolvency, unpaid claims, or violations of other laws.
• Requires insurers to pay an annual fee to the Authority, with failure to pay rendering the registration certificate liable to cancellation.

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