CONTACT US

084594-00000

About Us  :  Online Enquiry

Download

General Insurance Business (Nationalisation) Amendment Bill 2021

General Insurance Business (Nationalisation) Amendment Bill 2021

Why in news?

  • Recently, the General Insurance Business (Nationalisation) Amendment Bill, 2021, was passed by both the houses of the parliament.
  • It seeks to amend the General Insurance Business (Nationalisation) Act, 1972.

Key Provisions

  • It proposes amending the General Insurance Business (Nationalisation) Act, 1972 to remove the requirement for the Centre to hold at least 51 percent of equity in an 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.

Background

  • This bill was passed in line with government’s privatization drive. Finance minister Nirmala Sitharaman has announced ambitious privatisation agenda, including two public sector banks and one general insurance company in ger budget speech for 2021-2022. Accordingly, among four public sector general insurance companies namely, National Insurance Company Limited, Oriental Insurance Company Limited, New India Assurance Company Limited and United India Insurance Company Limited; government will dilute its shareholding in one company. Name of the company is yet to be finalised.                                                      General Insurance Business (Nationalisation) Amendment Bill 2021

Significance

  • Private Capital:It will bring in more private capital in the general insurance business and improve its reach to make more products available to customers.
  • Improved Efficiency:The move is part of the government’s strategy to open up more sectors to private participation and improve efficiency.
  • Enhance Insurance Penetration:It will enhance insurance penetration and social protection to better secure the interests of policyholders and contribute to faster growth of the economy

Concerns

  • Affect the Workers:It will affect the insurance sector in the country and the workers engaged with the General Insurance Company.
  • Total Privatisation:It may lead to total privatisation of general insurance companies. Privatising would lead to opening a Pandora’s Box, throwing into insecurity 30 crore policyholders.
  • Governments Loss:The government will also lose money by way of dividend in the proportion of shares being offered.
  • Pensions Safety:The pensioners in the four public sector general insurance companies were worried about the safety of their future pensions when the central government privatised one of them.
  • The pension fund is dependent on the contributions of the employees so that Pension Trust can pay the pensioners.

 

ALSO READ : https://www.brainyias.com/director-of-inquiry-for-lokpal/

Mussoorie Times

Send this to a friend