How the new Insurance Bill will change the way you save

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The Insurance Bill that was passed in the Parliament on Thursday has not only brought cheer to the industry players, but also spells good news for the consumers.

“With the Insurance Laws (Amendment) Bill, 2015 being cleared by Parliament investment of around 200 bn rupees is likely to come into the Indian insurance sector over next few years. There is a lot of interest among foreign insurance companies to enter the market here as it has a lot of potential of growth. With more foreign investment and expertise, new products are also likely to be launched,” said Shashwat Sharma, Partner, Financial Services, KPMG.

Sharing a similar sentiment, Yashish Dahiya, CEO and co-founder of Policy Bazaar added, “The insurance bill will hand more power to consumers by ensuring flexibility in paying premium through installments, faster claim settlements, access to legal recourse and capping the agents’ commission.

He further added that the Insurance Bill will now promote more transparency in the insurance products, thus making it easy for the consumer to understand his investment. “On the other hand, customers will have improved access to point of sales network for buying insurance policy. Moreover, online distribution channels will help consumers make an informed decision by analyzing products based on their requirement.,” explained Dahiya.

Besides, the bill will also allow greater time frame to a policyholder to question an insurance company in case of misinformation or misleading statements.

“There are many ways in which the insurance bill passed by the legislature is going to be helpful for the consumer who buys it--a few of the crucial pointers include that an insurance policy cannot be challenged on any ground after three years. This means if a fraud is detected three years after the policy has been in force, insurance companies will have to pay the policy holder. Thus, this will not lead to a distress to the consumer at the moment of urgency,” said Rohit Gadia, CEO of CapitalVia.

Besides, the new insurance bill will help consumers at large to trust insurance products as it ensures greater consumer protection. “It gives more powers to the insurance regulator, which will make it difficult for companies to take policyholders for a ride,” added Gadia.

The new Insurance Bill also puts a greater burden on the nominee of a policyholder too furnish proof in case of fraud. “The Bill has also added a new provision under Section 45 of the Insurance Act to shift the burden of proof on the beneficiaries of the deceased policyholder, in the event of fraud,” the Bill recommended.

Also, the Insurance Bill is expected to pump in new investments in the sector. According to Gadia, market estimates suggested that Rs 20,000 crore to Rs 25,000 crore in foreign funds is likely to come immediately.

“The money will help insurance companies to expand aggressively and will be beneficial for the people. It will be a big positive move for private insurers who have limited presence beyond metros and tier-1 cities. Also the domestic firms will look to expand aggressively with more money coming. More companies are likely to enter in to the insurance sector as well. This will lead to higher competition and insurance premiums may get cheaper for customers, analysts say. Insurance companies will now be able to bring innovation in products as well,” he explained.

Interestingly, the Insurance Bill has also allowed a policy holder to refuse an assignment or transfer of a policy, if he reasonably feels that the said transaction was for trading of insurance policies.

Gadia anticipates that the bill allows global insurers such as Britain's Prudential, which holds a minority stake in India's biggest private life insurer ICICI Prudential Life and others to increase their Indian stakes. And bring in innovation in the insurance sector. It could also pave the way for the year's biggest initial public offering, as HDFC Life, a joint venture between India's HDFC and Britain's Standard Life Plc, has said it would move towards a listing once the rule change is in place.
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