Insurance bill seeks to curb mis-selling, stringent laws for insurance intermediaries likely.
A long pending insurance law (amendment) bill has finally found its way to Rajya Sabha. Finance Minister Arun Jaitley is expected to table this bill before upper house on Monday.
Apart from FDI hike, the bill has proposed some stringent norms for both insurance companies and insurance intermediaries in order to curb mis-selling and discourage unethical sales practices.
The proposed amendments in insurance bill have sought to give more teeth to the insurance regulator. It proposes IRDA to impose a fine of up to Rs. 1 crore on insurance companies for mis-selling and violation of code of conduct.
The bill has proposed a host of changes. The bill proposes that insurers cannot repudiate the claims merely on the basis of suppression of material facts if the policyholder proves that there was no deliberate intention to suppress the fact.
Also, the regulator has doubled the penalty on insurance intermediaries from Rs.5 lakh to Rs.10 lakh for inducing pass backs. The bill proposes to restrain insurance agents from becoming directors in the insurer’s board.
There is some good news for both insurers and intermediaries.
Just like any company can appeal against SEBI’s order in Securities Appellate Tribunal, insurance companies can now get an option to challenge IRDA’s order in a higher tribunal. Also, now insurance agents can easily shift from one insurance company to another.
Besides, the bill stresses the need for insurance companies to issue policies in electronic format. It has suggested that insurers need to maintain the record of policies and claims in electronic mode. Also, it asks insurance firms to put such records on websites so that policyholders can easily access information.
In
order to protect the interests of policyholders the government has proposed
over 95 amendments in the bill.