The Law Commission and the Insurance Regulatory and Development Authority (Irda) are drafting an omnibus Insurance Act by merging the provisions of four existing legislations to give more teeth to the regulator.
Sources close to the process said, according to the plan discussed at a meeting between Irda and Law Commission officials, the Insurance Act, the Irda Act and large number of provisions of the LIC and GIC Acts will be merged into one comprehensive legislation for the insurance sector.
The new Act will not only provide the insurance regulator such powers as are vested under the Irda Act, 1999 and Insurance Act now, but will also bring to end some conflicts arising due to overlapping provisions of the two acts with some of the provisions of the LIC and GIC Acts.
The Law Commission is also looking at the penalties that can be imposed by the regulator. The LIC and GIC Acts will only cover the constitution of the public sector insurance companies, board appointments and the necessary provisions for running the companies.
The other provisions, some of which were put in place during the time of nationalisation of the life and the general insurance businesses, would be carved out from the LIC and GIC Acts and transferred to the new Insurance Act.
The sources said the Law Commission was expected to finalise its report in about a month which would then be circulated by Irda in the form of a discussion paper, for comments from the industry, experts and the general public. They, however, did not indicate any timeframe for introduction of the omnibus Bill. Irda chairman N Rangachary is expected to meet Law Commission chairman over the next few weeks before the discussion paper is finalised.
The Irda had sought the Law Commission
