Composite License for Insurer | 18 Dec 2024

Source: IE

Recently, the central government proposed introducing composite licenses through an amendment to the Insurance Act, 1938, aiming to increase insurance penetration in India and achieve ‘Insurance for All by 2047.

Composite License: A composite license allows insurers to offer life and non-life insurance under a single registration, consolidating operations into one entity.
- Currently, insurers need to obtain separate licenses for each line of business.
Benefits:
- A composite license reduces costs and compliance by allowing insurers to manage multiple lines under one entity, boosting innovation and efficiency.
- Life insurers can provide indemnity-based health insurance, improving underwriting and reducing costs with integrated IT systems.
- Agents can sell both life and non-life products, better meeting customers' financial needs.
Regulatory Changes:
- Public Sector Undertaking (PSU) insurers need amendments to the Life Insurance Corporation (LIC) Act of 1956 and the General Insurance Business (Nationalisation) Act (GIBNA) of 1972 to be eligible for composite licenses.