General insurers may soon be allowed to sell services such as gym memberships, vehicle repairs, and other diagnostic services in addition to their core insurance offerings.
The government intends to allow the insurers to expand their product range by offering services and products related to their insurance operations, one of the officials said, requesting anonymity. The proposed changes would be implemented through amendments to the Insurance Act, the official said; adding the changes would also boost the value of insurance distribution operations.
The government is currently finalizing the draft of the Insurance Laws (Amendment) Bill, 2022, which is likely to be introduced during the monsoon session of Parliament after Cabinet approval. The proposed legislation will not only offer insurance companies new opportunities but also usher significant reforms within the insurance industry, including introducing composite insurance licences and easing entry barriers for insurers.
While insurance companies will be permitted to offer products in a “related” line of business, they may still not be allowed to sell financial products, such as mutual funds, like banks, as the government and regulators are still unconvinced about the benefits of the move at this juncture and may consider the same after the insurance market matures in the country, the official cited above said.
The department of financial services proposed that insurers may be allowed to distribute other financial products subject to regulations, but it has now been decided that permission to distribute such products will be restricted to those related to their existing line of operations for now.
