ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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November 23, 1968 THE Joint Select Committee of Parliament on the Bill to amend the Insurance Act has modified considerably the provisions of the Bill relating to compulsory deposits by insurers. The Bill had proposed that an insurance company should make a compulsory deposit of Rs 20 lakhs for one or more classes of general insurance business. The Committee has suggested that a deposit of only Rs 10 lakhs be required of insurers whose gross premium income does not exceed Rs 1 crore in any year. Out of the 75 general insurers, over 55 will benefit from this concession. This concern of the Committee to give relief to small insurers is completely misguided as it defeats one of the basic aims that reform of general insurance should have, viz, rationalisation of general insurance business by preventing proliferation of too many small units. A large number of small units competing for a limited volume of business has been the major cause of malpractices in general insurance. The compulsory deposit requirement in the amending Bill would have been a useful instrument for weeding out small units or bringing about amalgamations which are among the major objectives of the amending Bill.

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