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Government clears move to deepen insurance reforms

The Cabinet on Tuesday cleared legislation aimed at deepening reforms in the country's insurance sector by allowing cooperative institutions to enter the business, a minister said.

"The Cabinet approved the introduction of the Insurance Amendment Bill, 2001 (in Parliament)," Parliamentary Affairs Minister Pramod Mahajan told reporters.

A senior government official said the amendments also seek to recognise brokers as insurance intermediaries and allow premiums to be paid by credit cards or smart cards.

The planned legislation, more details of which were not immediately available, will have to be cleared by parliament for it to become law.

The Indian insurance business was freed from decades of state control in 1999 when the Parliament passed a law allowing private and foreign firms to enter the sector.

Foreign companies are allowed to hold up to 26 per cent of an Indian insurance venture while the rest can be held by one or more Indian partners.

Scores of foreign insurers have set up in the Indian insurance market, viewed by many as one with huge potential with its one-billion-plus population.

Mahajan said the cabinet had also approved giving central ministers the authority to lower the retirement age of employees in state-controlled firms controlled by their ministries to 58 years from 60.

"This will apply to all public sector enterprises and all categories of employees, board level and below board level," he said.

The government had earlier increased the retirement age for employees in state-run companies to 60 years, but officials said concerns of rising expenditure in these companies had led it to reconsider this move.

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