Finance Minister Lekey Dorji introduced the Financial Services (Amendment) Bill of Bhutan 2025 for its first reading as an urgent Bill on 28 November during the First Session of the Fourth Parliament’s National Assembly session.
The Minister explained that the existing Financial Services Act of Bhutan (FSAB) 2011 restricts insurance companies from operating both life and general insurance businesses, except for those legacy companies that were already offering both prior to the Act’s enforcement.
The National Council previously deliberated on the need to revisit this provision to align with the constitutional mandate of promoting private sector development through fair market competition (Article 9, Section 10 of the Constitution of the Kingdom of Bhutan). The Council argued that the current restriction creates an uneven playing field—legacy insurers enjoy broader opportunities, while new entrants are allowed to engage in only one type of insurance, either life or general.
This market imbalance poses several risks, including limiting fair competition, constraining product innovation, and discouraging greater private-sector participation.
Under Section 251(b) of the FSAB 2011, “An insurer shall be restricted to writing either general or life insurance business, except where the general insurer’s life business is limited to reinsurance or the life insurer’s general business is restricted to accident and health.”
Additionally, Section 251(c) states, “Companies already doing business of both kinds before enforcement of this Act (‘composite company’) may continue to do so, provided they maintain separate book-keeping and accounting for life and non-life insurance operations and provided they take appropriate steps to ensure that life insurance policyholders are not at risk from losses in the non-life sector and vice versa.”
The proposed amendment aims to address these regulatory asymmetries and allow for composite insurance licensing, thereby leveling the market for both established and new insurers. The amendment is regulatory in nature and carries no direct financial implications for the Government. Implementation will be carried out by the Royal Monetary Authority (RMA) within its existing institutional and budgetary capacity. Any additional costs related to capacity building, supervisory system enhancements, or monitoring of composite insurers will be absorbed by the RMA without requiring extra public funds.
Under the amended Act, delegated legislation will continue to be exercised through existing Rules, Regulations, and Directives issued by the RMA. The Amendment Bill does not introduce new delegated powers but requires only minor, consequential revisions to the Rules and Regulations for Insurance and Reinsurance Companies in Bhutan 2019 to align the regulatory framework with the updated Act.
During the session, Opposition Member Loday Tseten questioned whether introducing the Amendment Bill as an urgent Bill complies with the House’s procedural rules, suggesting that the Bill did not meet the criteria for urgent categorization.
In response, Minister Lekey Dorji clarified that the proposal had been thoroughly reviewed and consulted with the Royal Monetary Authority and the Office of the Attorney General, both of which endorsed its classification as an urgent Bill.
Following the deliberations, the Speaker assigned the Amendment Bill to the Economic and Finance Committee, which will present its report during the third reading
Sangay Rabten
From Thimphu
