Final report to revamp insurance laws by December

The Law Commission is likely to come up with a final report on revamping all insurance laws by December this year after consultation with the Insurance Regulatory and Development Authority.

IRDA chairman N Rangachary on Friday met officials of the Law Commission to discuss the necessary changes required in Insurance Act of 1938, IRDA Act of 1999 and LIC Act.

The law commission is firming up a "consultative paper" by next month and hopes to finalise the report detailing the changes required in existing insurance laws by December, Rangachary said in a seminar orgainsed by Lal Bahadur Shastri Memorial Foundation in New Delhi.

Indications are that the Law Commission is likely to include stringent penalties to tackle serious frauds in the insurance sector. Moreover, breach in tariff charges may attract stiff penalty to the extent of suspension of licence of a company.

The Indian Penal Code does not have any separate treatment and regards frauds committed in insurance sector as mere cheating.

With gradual liberalisation, the regulator apprehends that there can be situations where companies, agents and policyholders may enter into some sort of racketeering.

After drawing up the consultative paper on reviewing insurance laws, the commission would invite public debate and firm up the final suggestions.

A Cabinet note for bringing in necessary amendments is expected only next year, Rangachary said.

All the anomalies present in the existing insurance laws would be removed, he said, referring to the flaws in the Motor Vehicles Act.