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The Indian Insurance Industry : India

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Chapter 1 - The Indian Insurance Industry.

It was the 10th Prime Minister of India, P. V. Narasimha Rao and his then Finance Minister Dr. Manmohan Singh, who set into motion, Phase 1 of the privatisation of the Indian Insurance Industry. The government was forced to act on the ‘globalization of India’ due to the country being economically weak and was suspected to be on the verge of bankruptcy. After the privatisation of the banking sector was looked into, the government setup a committee led by Chairman R. N. Malhotra in 1993 to propose change and reforms to be made in the Insurance Industry. The findings and recommendations of the committee in 1994 eventually led to the formation of the Indian Insurance regulator, the minor yet
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Although not conclusive, in 2005, 2009 and 2013, Dr. Singh Government, seemed to have expressed interest in bringing about the reforms on a few occasions. India in March this year, pushed through with Phase 2 of reforms.

The Insurance Laws (Amendment) Act 2015 now enacted, is widely expected to seamlessly remove archaic and redundant provisions in the legislations which existed till now and incorporate certain provisions to provide the IRDAI with the flexibility it requires to discharge its functions more effectively and efficiently. The relatively low 26% cap on foreign investment had been a widely discussed affair. The Amendment Act, now been enacted, introduces key changes to the Insurance Act, 1938, the General Insurance Business (Nationalization) Act, 1972 and the Insurance Regulatory and Development Authority (IRDA) Act, 1999. The major transformations include but are not limited to the following:

- Increasing the foreign investment cap to 49%.
- Permitting overseas reinsurers to open branch offices to carry out reinsurance business in India.
- Facilitating the entry of Lloyd 's of London, under regulations yet to be finalised.

As the first step to implement these changes, the Ministry of Finance introduced the Indian Insurance Companies (Foreign Investment) Rules 2015 (Rules) on 19 February 2015. The Rules require that approval from the Foreign Investment Promotion Board, Department of Economic Affairs, Ministry of Finance (FIPB) will
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