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Proposed amendments to insurance laws may lead to disputes in health claims, misappropriation: Unions

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 The proposed amendment to the definition of health insurance business is not exhaustive and may lead to disputes at the time of claims, said four unions in the Life Insurance Corporation of India (LIC).

The Unions also said the proposed amendments does not define the term liability which may lead to misappropriation by the insurers.

The four unions are: Federation of LIC of India Class I Officers’ Association, National Federation of Insurance Field Workers of India, All India Insurance Employees Association and All India LIC Employees Federation.

The Indian government has proposed drastic changes to the two insurance laws – Insurance Act 1938 and the Insurance Regulatory and Development Authority Act 1999- and has called for stakeholders views the planned changes.

Scrapping of the statutory Rs 100 crore startup capital for life and general insurance business and Rs 200 crore for reinsurance business, allowing different kinds of insurers including captives, changing the investment provisions are some of the major amendments proposed by the Indian government to the insurance laws.

The government also proposes to allow an insurer to distribute other financial products as specified by and subject to regulations and to services related or incidental to insurance business.

As per the proposed amendment to Section 2(6C) of the Insurance Act 1938 “health insurance business” means effecting contracts of insurance that provide sickness benefits or pay for medical and health expenses.

Quoting the existing definition in the Act, the four unions said the existing definition of health insurance business is explicit to include sickness, medical, surgical or hospital expense benefits.

However, the proposed amendment is not elaborative which may lead to dispute during a claim and the insurers may find scope to harass the customer. Therefore, the existing definition should not be replaced, the four unions said.

The employee unions are also opposed to the idea of insurers distributing insurers to distribute other financial products as it may distract the companies from their insurance products, distribution and proper attention on serving the policyholders.

Industry experts also told IANS that the policyholders funds should be ring fenced so that it is not touched by the players in the case of any liability that may arise due to selling other financial products.

The amendments to the laws are proposed in order to increase the penetration of insurance in the country, which continues to be low even after over two decades after opening up the sector.

The employee unions are also against the government’s plan to bring down the net owned funds to Rs.500 crore from the existing Rs 5,000 crore for a reinsurer.

Moreover, the minimum requirement of Rs 5,000 crore was enacted years back. Since then, huge inflation has taken place.

“Reduction in requirement by one tenth may result in insolvency which will put the customers in great sufferings. Therefore, we are of the opinion not to reduce the amount of net owned funds for new registration,” the unions said.

Referring to the proposed amendments to Section 27 of the Insurance Act, the unions said the proposed change does not define the liability, which may lead to misappropriation by the insurers.

Therefore, the liability must be defined in explicit terms.

On the proposed deletion of Section 27A of the Insurance Act the unions said: “This section deals with the provision of investments with a conservative view to safeguard the interests of the policy holders. Omission of this section may allow for irresponsible investments by the insurers causing huge harm to the customers.”

The unions are also against allowing multilevel marketing in the insurance sector.

Appointment of principal agent, chief agent and special agent to transact any insurance business will bring complexity in the system and will increase the probability of mis-selling as well as fraudulent acts, they said.

National

IAF to conduct large-scale combat drills near India-Pak border; NOTAM issued

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New Delhi, June 7: India has issued a Notice to Airmen (NOTAM) for a major Indian Air Force (IAF) exercise scheduled to take place near the southern sector of the India-Pakistan International Border in Rajasthan from Saturday, June 7, to Sunday, June 8.

The exercise is part of the IAF’s regular operational preparedness and will be conducted in airspace near the border.

According to the NOTAM, the aerial drill will commence at 3:30 p.m. on June 7 and conclude at 9:30 p.m. the following day.

During this period, airspace over the designated region will be restricted to ensure the safe and seamless execution of air operations.

An official from the Indian Air Force confirmed that the combat exercises will feature a range of advanced air assets, including frontline fighter jets such as Rafale, Mirage 2000, and Sukhoi-30, in addition to surveillance platforms and other support systems.

Although the Ministry of Defence has not officially connected the exercise to ongoing geopolitical tensions, the timing and location of the drill carry notable implications.

This sector has become a focal point amid rising tensions following a deadly cross-border terror attack in Pahalgam. That incident triggered reciprocal airspace restrictions by both India and Pakistan, significantly straining bilateral relations.

India recently closed its airspace to all Pakistani-registered and military aircraft from April 30 to May 23.

This action followed Pakistan’s earlier decision to bar Indian flights from its airspace, marking an escalation in diplomatic and military frictions.

The situation remains tense along the Line of Control (LoC) in Jammu and Kashmir, where frequent ceasefire violations by Pakistani troops have prompted firm retaliatory responses from Indian forces.

This comes against the backdrop of India’s ‘Operation Sindoor’, which was launched on May 7, in retaliation to the terror attack in Pahalgam, where terrorists killed 26 innocent people.

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International

Trump to sell his Tesla car as feud with Musk carries risks for both: Report

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Washington, June 7: US President Donald Trump planned to sell the red Tesla car he said he bought in March, according to local media reports.

Citing the New York Times, the media reported that Trump had bought the car to show his support for Elon Musk amid criticism of his role in the administration.

“Administration officials said Mr Trump showed little interest in engaging with Mr Musk, even after the billionaire signalled he would be open to de-escalating the fight” they currently have, the report added.

Late Thursday, Musk backed off a threat to “immediately” decommission SpaceX’s Dragon spacecraft, which transports NASA astronauts and supplies to and from the International Space Station.

A short time later, when Bill Ackman, the hedge-fund billionaire, posted on social media that the two men “should make peace for the benefit of our great country,” Musk responded, “You’re not wrong.”

“For Musk, a prolonged feud with Trump could be hugely expensive,” noted the report. His companies, including SpaceX, have benefited from billions of dollars in government contracts and were positioned to receive billions more.

On Thursday, Trump threatened to end those contracts.

The feud is risky for Trump as well, it added. Musk, the world’s richest person, who spent about 275 million US dollars to help elect Trump in 2024, had promised to give 100 million dollars to groups controlled by the president’s team before the 2026 midterms.

Those funds have yet to be delivered and are now very much in doubt.

This also comes against the backdrop of Elon Musk’s threat, which he later retracted, to cut off NASA’s use of SpaceX’s Dragon spacecraft would be a huge blow to NASA, depriving the space agency of the only American vehicle capable of transporting astronauts to the International Space Station and dramatically changing how NASA would access the $100 billion orbiting laboratory, The Washington Post has reported.

The threat, posted on X, came during an escalating fight between the wealthiest man in the world and President Donald Trump, after Trump had threatened to cancel all of Musk’s company’s federal contracts.

“Given SpaceX’s importance to multiple federal programs, severing those relationships could leave NASA as well as the Pentagon and intelligence agencies in a lurch,” noted the report.

Several hours after making the threat, Musk relented, saying in response to a post on X that he should cool off and reconsider: “Ok, we won’t decommission Dragon.”

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Crime

Man who issued death threat to Delhi CM Gupta, arrested from Ghaziabad

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New Delhi, June 7: A man who issued a death threat to Delhi Chief Minister Rekha Gupta has been arrested by a team from the North-West District Special Staff of the Delhi Police.

The accused was apprehended from Ghaziabad following swift investigative efforts after the threatening call was made late on Thursday night.

According to police officials, the threat call was made to the Ghaziabad Police Control Room (PCR) while the accused was allegedly under the influence of alcohol.

Shortly after the threat was received, the Delhi Police Control Room was alerted, and the matter was escalated due to the high-profile nature of the target.

Investigators identified the caller and tracked his location, but by the time authorities reached the source, the suspect had switched off his mobile phone.

After intensive tracing efforts, the Special Staff managed to arrest him from a hideout in Ghaziabad.

Preliminary interrogation has revealed that the accused is a law graduate (LLB), who had been facing personal turmoil due to a troubled marriage. His wife had recently left him, which reportedly pushed him into emotional distress.

Before making the death threat, he had placed another call in which he demanded to speak to his wife, police said.

Interestingly, the accused was found in possession of fake identification cards that appeared to be police credentials, raising suspicions that he may have attempted to impersonate law enforcement personnel.

Officers stated that he repeatedly tried to mislead the police during questioning.

“Assessment of the threat perception of VIPs or VVIPs is conducted by security agencies on the direction of the Ministry of Home Affairs (MHA),” a senior Delhi Police officer said.

Chief Minister Rekha Gupta is entitled to Z-category security under the standard protocol. Security agencies are expected to reassess her security cover following this incident, officials confirmed.

Police are continuing their investigation to determine whether the accused has any prior criminal history or links to other disruptive activities.

Authorities have also launched a separate enquiry into the use of forged police IDs found in his possession.

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