Standing Committee on Finance released report on “Performance Review and Regulation of Insurance Sector” | Current Affairs | Vision IAS
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    Standing Committee on Finance released report on “Performance Review and Regulation of Insurance Sector”

    Posted 08 Feb 2024

    Updated 16 Mar 2024

    2 min read

     

    • Status of India’s Insurance Sector
      • Insurance Penetration (percentage of insurance premium to GDP) at 4.2% in 2021-22 (Global average: 7%) compared to 2.71% in 2001-02. 
      • Insurance Density (ratio of premium to population) at $91 in 2021-22 (Global average: $874) compared to %11.5 in 2001-02. 
      •  India ranked tenth in global insurance business with market share of 1.85% in 2021. 

     

    • Recommendations by Committee
      • Composite licensing: Allow composite licensing, enabling an insurance company to offer both life and non-life insurance products.
        • Benefits: Reduce costs and compliance hassles for insurers and offer customers more choice and value. 
      • GST: Rationalize GST rate on insurance products, especially health and term insurance, which is 18% at present.
        • Need: High premium burden acting as deterrent to getting insurance policies
      • Open Architecture: Introduce ‘open architecture’ concept for insurance agents, which enables agents to associate with multiple insurance companies. 
        • Benefits: Higher insurance penetration, financial inclusion and lower distribution costs.
      • Unclaimed policies: A central portal like UDGAM (RBI portal for claiming unclaimed deposits) be created. 
      • Capital requirement: RBI, on behalf of Government of India, can issue ‘on-tap’ bonds of up to 50 years (current maximum tenure – 40 years) for investment by insurance companies.
    • Tags :
    • Insurance
    • GSTonInsurance
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