NEW DELHI, July 24: Accepting the suggestion of the standing committee on finance, the government has extended the scope of the Insurance Regulatory Authority (IRA) to cover the re-insurance business.

To give effect to the suggestions accepted by the government, finance minister P Chidamabram has given notice of amendments to the IRA Bill, which was introduced in the Lok Sabha in the Budget session. The Bill was taken up for discussion on Thursday. The debate, however, remained inconclusive.The amendments seek to replace "insurance business" with "insurance and reinsurance business."

The powers of the chairperson of the IRA are also proposed to be enhanced. The official amendments propose to introduce a section, 8A, in the bill which clarifies that, "the chairperson shall have the powers of general superintendence and direction in respect of all administrative matters of authority".

The government has also agreed to give more time to IRA to report on its activities and the work done towards promotion and development of insurance business.

Earlier, the time limit was six months after the close of a financial year. The limit has been extended to nine months instead. This has been done to provide time to the IRA to compile reports after getting the feedback from those in the business.

The other amendments deal with the service conditions of the chairman and members of the IRA. The bar on re-employment will not be on part-time members.

Introducing the amendment bill in the Lok Sabha, Chidambaram stressed that the proposed authority would protect the interests of holders of insurance policies and would regulate, promote and ensure orderly growth of the industry.

He further said the government stood by its commitment to the common minimum programme. He said both the General Insurance Corporation (GIC) and Life Insurance Corporation (LIC) would continue to be in the public sector and would be strengthened.

He said in order to streamline the functioning of the two insurance companies, they had to be given competent boards. He added that the government was in the process of making LIC and GIC international companies as they have already started functioning in Mauritius and Bahrain.

According to the financial memorandum, recurring expenditure towards pay and allowances of the chairpersons and other members will be of the order of Rs 52 lakh per annum and for the officers and employees of the authority, Rs 133 lakh per annum.

Other recurring expenditure by way of rent, maintenance and training would be around Rs 182 lakh per annum. Other non-recurring expenditure by way of purchase of accommodation, furniture and office equipment will be approximately Rs 855 lakh.

Initiating the debate, Thawar Chand Gehlot (BJP) said there was a lot of wasteful expenditure in the insurance companies. He wanted loans at a reduced interest to policy holders.

Sriballab Panigrahi (Cong) said there was an apprehension that setting up of such an authority was a prelude to privatisation of insurance companies. There was an urgent need to expand the insurance sector by also bringing crop insurance under it. Shatrughan Prasad Singh (CPI), Vishambhar Prasad Nishad (BSP), Girdhari Lal Bhargava and Rasa Singh Rawat (both BJP) supported the Bill while Basudeb Acharya (CPI-M) opposed it.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.