Sunday, December 5, 2021
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Sunday, December 5, 2021
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Rajya Sabha Passes General Insurance Business (Nationalisation) Amendment Bill, 2021 Without Debate

The Rajya Sabha enacted the General Insurance Business (Nationalisation) Amendment Bill, 2021 on August 11 without debate, despite opposition MPs’ protests. The bill intends to increase private sector engagement in government-run insurance businesses.

The bill should be forwarded to a House select committee, according to opposition parties in Parliament. On August 3, it was passed by the Lok Sabha. Finance Minister Nirmala Sitharaman introduced the bill for discussion and passage. Protesting opposition members flocked to the House well, shredding papers in the process.

They accused the government of “bulldozing” legislation and not adhering to legislative rules.

The General Insurance Business (Nationalisation) Act, 1972, is being amended by this bill. The Act was enacted to nationalise all private general insurance businesses operating in India.

The General Insurance Corporation of India was established under the 1972 Act (GIC). The nationalised companies’ businesses were restructured under four GIC subsidiaries: (i) National Insurance, (ii) New India Assurance, (iii) Oriental Insurance, and (iv) United India Insurance.

In 2002, the Act was changed to transfer ownership of these four subsidiary companies from GIC to the central government, allowing them to operate independently. According to PRS Legislative Research, GIC has only done reinsurance business since 2000.

The bill proposes to eliminate a provision from the Act that requires the Central Government to own at least 51% of the share capital in a specified insurer.

These bill amendments are in keeping with the finance minister’s Budget speech, in which she unveiled a major privatisation plan that included two public sector banks and one general insurance company.

“We propose to take up privatisation of two Public Sector Banks and one General Insurance company in the year 2021-22. This would require legislative amendments,” she had said at the time.

National Insurance Company Limited, New India Assurance Company Limited, Oriental Insurance Company Limited, and United India Insurance Company Limited are the four general insurance companies in the public sector as of now.

One of these will now be privatised, with the government still to decide on a name.

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