SUBJECT: INSURANCE(FUND) MANAGEMENT

TOPIC:

INUSRANCE REGULATORY AND DEVELOPMENT AUTHORITY

IRDA

WHAT IS INSURANCE ?

Insurance is the equitable transfer of the risk of a loss, from one entity to another in exchange for payment. It is a form of risk management primarily used to hedge against the risk of a contingent, uncertain loss.

INTRODUCTION TO IRDA Insurance Regulatory and Development Authority (IRDA) is an autonomous apex statutory

body which regulates and develops the insurance industry in India. It was constituted by a

Parliament of India act called Insurance Regulatory and Development Authority Act, 1999 [2][3]

and duly passed by the Government of India.[4]

The agency operates from its headquarters at Hyderabad, Andhra Pradesh where it shifted from

Delhi in 2001.[5]

IRDA batted for a hike in the foreign direct investment (FDI) limit to 49 per cent in the

insurance sector from the erstwhile 26 per cent.[6] The FDI limit in insurance sector was raised

to 49% in July 2013.[7]

HISTORY The IRDA Act, 1999 was passed as per the major recommendation of the Malhotra Committee

report (7 jan,1994) which recommended establishment of an independent regulatory authority

for insurance sector in India. Later, It was incorporated as a statutory body in April, 2000. The

IRDA Act, 1999 also allows private players to enter the insurance sector in India besides a

maximum foreign equity of 26 per cent in a private insurance company having operations in

India. The FDI limit in insurance sector was raised to 49% in July 2013. It serves as an

Authority to protect the interests of holders of insurance policies, to regulate, promote and

ensure orderly growth of the insurance industry and for matters connected therewith. IRDA role [8] is to protect rights of policy holders & they provide registration certification to life insurance

companies & responsible for renewal, modification, cancellation & suspension of this registered

certificate.

Organizational structure or Composition of Authority

As per the section 4 of IRDA Act' 1999, Insurance Regulatory and Development Authority (IRDA, which was constituted by an act of parliament) specify the composition of Authority.IRDA is a ten member body consisting of

A Chairman,-(T.S. Vijayan)

Four whole-time members,-(R.K. Nair,M. Ram Prasad,S. Roy Chowdhary,D.D. Singh)

Four part-time members,-(Anup Wadhawan,S.B. Mathur,Prof. V.K.Gupta,CA. Subodh Kr. Agarwal)

All members are appointed by the Government of India.

ADDITIONAL INFORMATION Recently the Finance Minister of India announced the setting of insurance

repository system. An Insurance Repository is a facility to help policy holders buy and keep insurance policies in electronic form, rather than as a paper document. Insurance Repositories, like Share Depositories or Mutual Fund Transfer Agencies, will hold electronic records of insurance policies issued to individuals and such policies are called “electronic policies” or “e Policies”.

OBLIGATION OF IRDA

The Insurance Regulatory and Development Authority (IRDA) is a public authority as defined in the Right to Information Act, 2005.

As such, the Insurance Regulatory and Development Authority is obliged to provide information to members of public in accordance with the provisions of the said Act.

IRDA Website The IRDA maintains an active website (URL: http://www.irda.gov.in ). The site

is updated regularly and all the information released by the IRDA is also simultaneously made available on the website. The information published in public domain include the following

1. Acts/Regulations 2. Information relating to Insurers/Reinsurers, Agents Training Institutes, Appointed Actuaries. 3. Information relating to Surveyors, Third Party Adminstrators, Insurance Brokers, Corporate Agents 4. Information relating to Insurance Councils, Insurance Ombudsmen.5. Annual Report / IRDA Journal.6. Press Releases.

Complaints against Insurance Companies

IRDA has provided for a separate channel for lodging complaints against deficiency of services rendered by Insurance Companies.

If you have a complaint/grievance against an insurance company for poor quality of service rendered by any of its offices/branches, please approach the Nodal Officer of the Insurance Company concerned.

In case you are not satisfied with the Insurance Company’s response you may also file a complaint with the Insurance Ombudsman in your State.

The Insurance Ombudsman is an independent office to provide speedy and cost effective resolution of grievances to the customers.

For more details on Insurance Ombudsman Scheme and their contact numbers, please visit http://www.irdaindia.org/ins_ombusman.htm.

Complaints from Policyholders

Policyholders who have complaints against insurers are required to first approach the Grievance/Customer Complaints Cell of the concerned insurer.

If they do not receive a response from insurer(s) within a reasonable period of time or are dissatisfied with the response of the company, they may approach the Grievance Cell of the IRDA. For details of contact, please visit IRDA website http://irdaho/irdaweb/grievancescell.htm

How long will IRDA take to provide information?

IRDA will, within 30 days of receipt of the application for information along with the fee, communicate to the requestor whether it can or cannot provide the information.

CONT…. As per the Right to Information (Regulation of Fee and Cost) Rules, 2005, the public

authority shall charge:- Rs.2/- for each page (in A-4 or A-3 size paper) created or copied; - actual charge or cost price of a copy in larger size paper; - actual cost or price for samples or models; and ? - for inspection of records, no fee for the first hour; and a fee of Rs.5/- for each 15 minutes (or fraction thereof thereafter)

Further, to provide information under Section 7(5) of the Right to Information Act, 2005, the public authority shall charge:

- Rs. 50/- per diskette or floppy; and - for information provided in printed form at the price fixed for such publication or Rs. 2/- per page of photocopy for extracts from the publication.

MISSIONa) To protect the interests of the policy holders

b) To promote ,regulate and ensure orderly

growth of the insurance industry.

c) Conduction of insurance businesses

across India in an ethical manner

DUTIES & RESPONSIBILITIES

According to the Section 14 of IRDA Act of 1999 there are certain duties:

To regulate, promote and ensure orderly growth of the insurance business and re-insurance business.

To issue a certificate of registration and powers to renew, modify, withdraw, suspend or cancel the registration.

Protection of the interests of the policy holders.

To specify qualifications, code of conduct and practical training for intermediaries.

To specify the code of conduct for surveyors and loss assessors.

To promote the efficiency in the conduct of insurance business.

To promote and regulate the organizations connected with the insurance and re-insurance business.

To conduct enquiries and investigations for insurers, intermediaries, and other organizations connected with the insurance business

To control and regulate the rates, advantages, terms and conditions that may be offered by insurers.

To specify the form and manner in which books of account shall be maintained.

To regulate the investment of funds by insurance companies.

To regulate the maintenance of margin of solvency.

Supervising the functioning of the Tariff Advisory Committee.

To specify the percentage of premium income of the insurer to finance schemes.

To specify the percentage of life insurance business and general insurance business to be undertaken by the insurer in the rural or social sector.

ombudsman

The institution of Insurance Ombudsman was created by a Government of India Notification dated 11th November, 1998 with the purpose of quick disposal of

the grievances of the insured customers and to mitigate their problems involved in redressel of those grievances. This institution is of great importance

and relevance for the protection of interests of policy holders and also in building their confidence in the system. The institution has helped to generate

and sustain the faith and confidence amongst the consumers and insurers.

 

APPOINTMENT OF INSURANCE0MBUDSMAN

The governing body of insurance council issues orders of appointment of the insurance Ombudsman on the recommendations of the committee comprising of Chairman, IRDA, Chairman, LIC, Chairman ,G.I.C and are presentative of the

Central Government. Insurance council comprises of members of the Life Insurance council and general insurance council formed under Section 40 C of the Insurance Act, 1938. The governing body of insurance council consists of

representatives of insurance companies.

 

POVERWER OF OMBUDSMANInsurance Ombudsman has two types of functions to

Perform

(1) conciliation.

(2) Award making.

The insurance Ombudsman is empowered to receive and consider complaints in respect of personal lines of insurance from any person who has any grievance against an insurer.

The complaint may relate to any grievance against the insurer i.e.

(a) any partial or total repudiation of claims by the insurance companies.

 

b) dispute with regard to premium paid or payable in

terms of the policy,

(C) dispute on the legal construction

of the policy wordings in case such dispute relates to claims

(d) delay in settlement of claims and

(e) Non issuance of any insurance document to customers after

receipt of premium

 

CORPORATE GOVERNANCE BY IRDA

GUIDELINES FOCUSED ON :- Control functions

Board of directors

Governance structure

Disclosures

Stake holders

Interaction with supervisors

Whistle blowing policy

Irda prescribed insurance companies to comply with guidelines from this fiscal onwards.

(i.e:-current financial year)

Appropriate systems should be establish to regulate the risk appetite and risk profile of the company. 

"The Board should define the standards of business conduct and ethical behaviour for directors and senior management, and standards to be maintained in policy-holder servicing and in rederessal of grievances of policy-holders," IRDA said in a circular issued today. 

It will also enable identification and measurement of significant risks to which the company is exposed in order to develop an effective risk management system, the IRDA guidelines said. 

In case of Insurance Companies, Insurance Regulatory Development Authority (IRDA) has been entrusted with the regulatory responsibility to protect the interests of the policyholders and accordingly would like to ensure that appropriate governance practices are in place in the insurance companies for maintenance of solvency, sound long-term investment policy and assumption of underwriting risks on a prudential basis, particularly as the insurance companies are yet to be listed