The General Insurance Business (Nationalization) Amendment Bill, 2021, was recently passed by both houses of parliament.
Amendments to the bill
- Proposed amendments to the Bill meant for removing mandatory requirement of Central government holding not less than 51 percent of the equity capital in a specified insurer.
- As per the Bill, amendments had become necessary to attract larger private participation in public sector insurance companies, enhance penetration of insurance sector and to provide social protection by securing interests of policyholders.
- The Act defines general insurance business as fire, marine or miscellaneous insurance business.
- The Bill specifies that a director of a specified insurer, who is not a whole-time director, will be held liable only for certain acts.
What is the GIB Act?
- The 1972 Act set up the General Insurance Corporation of India (GIC).
- The businesses of the companies nationalized under the Act were restructured in four subsidiary companies of GIC: (i) National Insurance, (ii) New India Assurance, (iii) Oriental Insurance, and (iv) United India Insurance.
- The Act was subsequently amended in 2002 to transfer the control of these four subsidiary companies from GIC to the central government, thereby making them independent companies.
- Since 2000, GIC exclusively undertakes the reinsurance business.