In a bid to discuss the problems of General Insurance Company, Union Finance Minister P Chidambaram and Minister of State for Finance Namo Narain Meena Monday convened the meeting of the chief executives of General Insurance companies in New Delhi.
In the meeting Chidambaram and Meena listen the problems of the general insurance companies like the wish-list of removal of administered pricing mechanism and capping of liability on third party motor insurance figure, other being withdrawal of service tax on reinsurance, allowing banks to sell more than one non-life insurer's products and extension of tax benefits to other policies.
He also pledged to take appropriate action to smoothen their business.
Chidambaram had announced similar measures for the life insurance sector after a meeting with company heads on October 1.
General insurance officials said that there is indefinite liability for non-life insurers to third parties, while the premium is definite.
Chidambaram said the Insurance Regulatory and Development Authority (IRDA) could introduce the use and file system and chalk out certain standard products which could be used by the industry under the proposed system.
India's insurance business was full of promise when it was thrown open to competition in 2000, but has instead been brought to its knees by losses, regulatory change, uncertainty and a sharp slowdown in economic growth.
The government sought to remove a key barrier to bringing in much-needed capital by proposing to raise the cap on foreign ownership of insurance firms to 49 percent from 26 percent.
In the non-life segment, where six of the 27 firms operating are state-run, 13 private sector insurers including units of Canada's Fairfax Financial and Japan's Tokio Marine reported losses in the year ended March 2011.
The cumulative underwriting losses for non-life insurers were nearly USD 6 billion in the year to March 2010, the Boston Consulting Group said in a report last year, and industry officials said the figure may have since touched USD 7.5 billion.
India's insurance industry needs an estimated USD 12 billion in capital to be adequately funded.
--With ANI Inputs--
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