Update On 49% Cap And Lloyd’s Entry

The long awaited Insurance Laws (Amendment) Bill (the Bill) will finally become a law in India as it has been passed by the Parliament of India. The Bill will replace the Insurance Law (Amendment) Ordinance, 2014, which was promulgated by the President of India on December 26, 2014 after the Bill could not be passed in the previous session of the Parliament. The Bill amends three Acts, namely: the Insurance Act, 1938; the General Insurance Business (Nationalisation) Act, 1972; and the Insurance Regulatory and Development Authority Act, 1999.

Highlights

1. Increase in foreign equity cap to 49%

   The Bill increases the maximum permitted limit of foreign equity in Indian insurance companies from 26% to 49%. The limit shall be a composite cap – either as a direct investment or by a portfolio, or a combination of both. The management and control of the insurance companies shall remain with Indian companies. The term "control" has been defined to mean "the right to