Media reports say that the cabinet has approved ordinance on insurance bill to pave the way for FDI hike in insurance.
A much awaited insurance bill has finally made its way after a logjam of six years. The BJP led government has decided to take ordinance route which could not be passed through the upper house amid uproar of opposition on other issues.
Media reports say that the cabinet has approved ordinance on insurance bill on Wednesday or last day of current winter session to ensure implementation of 49% foreign investment in insurance sector.
An ordinance is a law in which the cabinet can introduce legislative changes without prior consent of the members of parliament (MPs). However, the ordinance must be presented before parliament within 6 weeks of the first sitting i.e. budget session. Parliament could either choose to pass the ordinance as a law or let it lapse.
Along with the hike in FDI in insurance, the bill has a provision relating to agent commissions. The bill will give IRDA the flexibility to review, monitor and decide the commission structure of insurance intermediaries. With the implementation of insurance bill, IRDA can remove cap from commissions paid to the insurance intermediaries for selling insurance policies which it has been propagating for years. Removal of such cap will give insurers the freedom to decide the commission structure on their own.