The government is planning to rewrite the Insurance Act, 1938, to provide more powers to the Insurance Regulatory and Development Authority (IRDA). The Act has been referred to the Law Commission for review.
The Law Commission was expected to submit a white paper on the necessary amendments by the end of June, official sources told Business Standard. The recommendations will then be reviewed by the government and the IRDA and a Bill to amend certain provisions of the Insurance Act, 1938, will be introduced in Parliament by December this year.
The present Insurance Act, which some experts say is still relevant, formed the basis for all regulations issued by IRDA in the run-up to the opening up of the Indian insurance sector.
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Certain provisions of the Insurance Act were modified by the IRDA Act, 1999, which provided statutory powers to the regulator.
The officials, however, said some of the provisions of other legislation often override the provisions of the Insurance Act. A case in point is the Life Insurance Corporation (LIC) Act which, the law ministry said, overrode the Insurance Act.
In the past, LIC ran into trouble with IRDA on two occasions because the provisions of the Act governing the corporation were vastly different from those of the Insurance Act or the IRDA Act. Moreover, some penalty provisions could also be introduced into the Act.
IRDA chairman N Rangachary confirmed the development and said: