There has been a lot of buzz around the Insurance Law (Amendment Bill) 2023 that the government is likely to introduce in the Parliament in the monsoon season.
The bill, with proposed amendments to the Insurance Act 1938 and Insurance Regulatory and Development Authority Act 1999, is going to be a game-changer for large enterprises as well as insurance players in the market. The implementation of the Insurance Law (Amendment Bill) 2023 will not only stimulate economic growth but also contribute to the overall development of the insurance and healthcare sectors in India. It is expected to introduce groundbreaking changes in the delivery of health insurance, revolutionising the industry in India.
The proposed bill encompasses four key amendments that aim to reshape the insurance landscape:
- Reducing the Rs. 100 Cr minimum capital requirements for the launch of an insurance company: This will enable higher participation & entry of new players into the market. It will foster competition and innovation, as smaller companies can now enter the industry and offer their unique products and services.
- Opening up registration to various classes, sub-classes, and types of insurers is also proposed, thereby permitting composite, stand-alone or other types of insurers to seek a license. A composite license would mean an insurer can offer both life cover and the whole/any part of non-life insurance like motor or health insurance. This flexibility will expand the options available to policyholders and promote comprehensive coverage. If the proposal for composite insurance registration is passed, there would be a change in solvency margin and capital requirement for these companies. Currently, the solvency ratio is pegged at 150 per cent while paid-up capital is Rs 100 crore as per the existing law.
- Introduction of captive insurers: The amendments suggest allowing industrial houses to establish their own insurance companies that cater specifically to their business needs. This provision will empower enterprises to have greater control over their insurance coverage and ensure tailored policies that align with their specific requirements.
- Health-related products and services by insurance companies: Perhaps the most impactful amendment, this provision allows insurance companies to offer health-related products and services directly to policyholders. By collaborating with healthcare providers, insurers can enhance the value of their insurance products by providing access to high-quality, value-added healthcare services.
While the implementation of such a notion of insurance + healthcare is a novel step for India, it is not entirely unprecedented. New-age health insurers have collaborated with large healthcare providers globally like Livongo, Omada, and Optum in the US, Oviva and Liva in the UK, and Medibuddy and Zyla Health in India to provide their policyholders with the gift of good health alongside security.
Health coverage in India currently stands at ~36% (520 million people covered), with ~310 million lives covered under government schemes and ~210 million under retail & group insurance. The retail & group insurance market is expected to grow at a compound annual growth rate of 20% from 2023 to 2030.
At present, India is home to 24 life insurance companies and 31 non-life or general insurance firms. This count also includes specialized entities such as the Agriculture Insurance Company of India Ltd and ECGC Ltd. Notably, the government made an amendment to the Insurance Act last year, allowing foreign holding in insurers to increase from 49% to 74%.
Furthermore, the General Insurance Business (Nationalisation) Amendment Bill, 2021, recently passed by the Parliament, grants the central government the authority to reduce its stake to less than 51% in specified insurers. This paves the way for the privatisation of certain insurance companies.
Since the privatisation of the insurance sector, various amendments have been introduced to foster growth. For instance, in 2015, the Insurance Act was amended to raise the foreign investment cap from 26% to 49%. All these amendments collectively have contributed to the exponential growth of the insurance sector in India.
These amendments reflect the government’s commitment to fostering a favourable business environment and promoting the well-being of its citizens by improving policyholders’ returns, facilitating the entry of more players into the insurance market to boost economic growth and employment, enhancing operational and financial efficiencies within the insurance industry, and enabling a favourable environment for conducting business operations.
We are excited to partake in the new-age vision wherein all the stakeholders benefit from a collaborative ecosystem, and most importantly, the citizens of India are able to lead healthier and happier lives with secure health.
About Zyla Health:
Zyla Health is India’s highest-rated personalised care management platform focused on improving health outcomes. Zyla enables care at scale for insurers and employers through its human-assisted AI on the 24×7 conversational Zyla app (consistently rated 4.8+). Care implemented by Zyla spans medical, physical and mental health needs. Zyla works with leading insurance and corporates, including the Reserve Bank of India, Jindal Steel, DHL, Godrej and insurers such as Aditya Birla Health Insurance, Max Life, and others. For more details, please visit: Zyla
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