FinMin likely to allow Value-Added Services in insurance via legislative amendment end of July

FinMin likely to allow Value-Added Services in insurance via legislative amendment end of July

The Ministry of Finance is likely to introduce an amendment to the Insurance Act in the upcoming Monsoon Session of Parliament, which will explicitly permit insurance companies to offer value-added services.

According to sources familiar with the matter, the services offered would include wellness programs, preventive health check-ups, and teleconsultation, alongside core insurance products.

The proposed change, sources said, will formally insert a clause into the Insurance Act that allows insurers to provide services “incidental or related to insurance.”

Currently, insurers do offer wellness-related or preventive services, but these are typically unbundled from the main insurance product.
They are often provided through tie-ups with third-party service providers and not embedded within the main insurance contract. The unbundled nature of these offerings also means they operate in a grey zone of regulatory clarity.

“While the Insurance Regulatory and Development Authority of India (IRDAI) has, over the years, encouraged insurers to focus on preventive care and wellness under the broad umbrella of customer-centric reforms, the lack of statutory backing has limited insurers’ ability to innovate, said a senior official of an insurance company.

“This amendment is aimed at formalising what is already a growing practice in the industry,” he said.

This change will be part of the Insurance Amendment Act, which is set to be introduced in the upcoming Monsoon Session of Parliament, expected to begin in the second half of July.

Alongside allowing insurers to offer value-added services related to their core business, the amendment also includes provisions to simplify registration norms, introduce composite licenses for insurers to sell multiple classes of insurance, and implementation of the increase in Foreign Direct Investment cap to 100 percent.