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| Indian Finance Minister P Chidambaram [File Photo] |
New Delhi:In an attempt to ease the insurance policy
in the nation Indian Finance Minister P Chidambaram announced a revival package
for the life insurance sector on Monday.
The announced package is intended to benefit
the companies as well as the policy holder.
The package is aimed to ease investment
norms for insurers, faster clearance for new products, easing of procedures and
allowing banks to sell products of more than one insurance company.
Addressing presser here in New Delhi P Chidambaram
said the country's insurance regulator, Insurance Regulatory and Development
Authority (IRDA), will consider ‘Use and File’ system for introduction of
simple and easily understood products. Life insurance companies, subject to
some conditions, can introduce a product even without getting formal approval
from the IRDA.
IRDA will also consider relaxing norms for
insurance companies investing in debt instruments to encourage investments in
securities other than the AAA-rated ones.
Notably,
existing rules allows insurance companies to put 75 per cent of their debt
market investment into AAA-rated securities.
The finance ministry has also agreed to address tax-related issues, such as a
reduction in service tax, tax treatment of annuity products on a par with the
New Pension Scheme and Tax Deducted at Source on commission payments made to
agents, of insurance companies.
The Finance Minister said banks should act as brokers and the fiduciary
responsibility of the bank will be to the policyholders.
Insurance reform is widely seen as crucial because according to IRDA estimates,
the sector needs a capital infusion of over $12 billion over the next five
years.
India has 24 life insurance companies and an equal number of general insurance
companies.
The Finance Ministry, on 22 August 2012, approved 49 per cent foreign direct
investment (FDI) in the insurance and pension sector from 26 per cent.