The Insurance Regulatory and Development Authority Act, 1999 is an Act to provide for the establishment of an authority to protect the interests of holders of insurance policies, to regulate, promote and ensure orderly growth of an insurance industry and for matters connected therewith or incidental thereto and further to amend the Insurance Act, 1938, the Life Insurance Corporation Act, 1956 and the General Insurance Business (Nationalisation) Act, 1972.

The Parliament ratified the Insurance Regulatory and Development Authority Bill, 1999 on 7-12-1999, thus stigmatizing the monopoly of the Life Insurance Corporation and General Insurance Corporation over the insurance sector.

The Bill, adopted by the Lok Sabha on December 2, was passed in the Rajya Sabha on 7-12-1999. The Insurance Regulatory & Development Authority Act, 1999 seeks to open up the insurance sector for private companies with a foreign equity of 26 per cent.  It is also aimed at ending the monopoly of the Life Insurance Corporation (LIC) and General Insurance Corporation (GIC) in the insurance sector of the country.

Finance Minister, Mr. Yashwant Sinha, asserted that the government was not in favour of State monopolies.  Reiterating that the policy of the government was one that was for competition, Mr. Sinha, however, assured the House that there would be a level playing field for the private and State owned insurance companies: "The Regulatory Authority will not do to the public sector what it would not do to a private company", he said as he allayed fears that the legislation would be detrimental to the interests of the social sector.

Stating that the government is under no pressure to bring in the Bill, the Finance Minister said that the Government is bringing the Bill on its own accord.

Mr. Sinha, on his part, said the government had given "ample notice" of its intention to privatise the insurance sector.

Mr. Sinha set at rest doubts about dilution of equity of the LIC and GIC.  The present government, he said, has no intention to privatise these corporations: "Neither is it our case that the LIC and GIC have not functioned.  They have discharged their responsibility well but they need to do more". He said adding that it was not possible for the LIC and GIC to cover a country as large as India in its entirety" "That is why penetration of LIC and GIC has been inadequate".

Drawing the attention of the House to the fact that LIC and GIC had branches in 26 countries, he sought to know from the members that when LIC and GIC could go to other countries then why couldn't other countries come to India?  The 26 per cent equity cap does not mean surrendering freedom, he clarified.

On the issue of loss of sovereignty, he said that similar references were expressed when the banking sector was opened up but the experience has been quite to the contrary.  The LIC and GIC, he asserted, are geared to face competition.

This comprehensive write-up comprising the Insurance Regulatory and Development Authority Act, 1999 with short comments and Regulations relating thereto would serve the purpose of a ready referencer on the subject.  A creative feedback from the learned readers, bringing to our notice any mistake, error or omission or discrepancy that might have crept in this book in spite of our sincere efforts to avoid those, is most welcome, for it will help us improve the overall quality, style and presentation of the book in the forthcoming editions.