Issues and Prospects by Puneet Gupta - ICSI · Puneet Gupta • Insurance ......
Transcript of Issues and Prospects by Puneet Gupta - ICSI · Puneet Gupta • Insurance ......
Issues and Prospectsby
Puneet Gupta
• Insurance provides financial protection against a loss arising out of happening of an uncertain event.
• Principle of risk-sharing. Spreads the risk of a few people over a large group of people exposed to similar type of risk.
• Insurance is a Contract – based on Terms and Conditions.– Happening of insured peril + Fulfillment of T&C =
indemnification– Non-fulfillment = No payment under policy
Certain risks coverages are mandated by law under various statutes and Acts e.g. Motor Third Party Insurance, Public Liability Insurance;Others are purely voluntary e.g. Fire, Professional Indemnity.
Insurance Act, 1938;IRDA Act, 1999;Contract Act, 1872;Motor Vehicles Act, 1988;Employees’ Compensation Act, 1923;Public Liability Insurance Act, 1991;Prevention of Money- Laundering Act, 2002
• Statutorily mandated and can be opted for under Comprehensive Policy or ‘Act Only’policy;
• Violation of the mandate punishable under section 146 r.w. s. 192 of the MV Act;
• Defenses available to Insurance Company limited by s. 149 (2) of MV Act: – Invalidity of Driving License– Invalidity of Permit– Invalidity of Use
Death/InjurySection 140 r.w. s166 and s. 163A of the MV Act;Unlimited Liability
Property DamageRs. 6, 500 extendable up to Rs. 7.5 lakhs on payment of extra premiumLimited Liability
DeathAge;Income;Occupation /Profession;Dependency;Contribution to the family
InjuryDisability;Age;Income;Occupation /Profession
• S. 163 A– Applicable only where
income of deceased was not more than Rs. 40,000 p.a;
– No need to prove negligence
– Payment calculated as per second schedule
• S. 140– No Fault Liability– Interim relief: Death =
Rs. 50,000/-, Perm. Disability = Rs. 25,000/-
• S. 166– No fixed formulae for
calculation of compensation
– Courts to give ‘just compensation’
– Factors are dynamic
Disability as per Medical Standards is considered to calculate compensation;Further consideration is given to the difference to his income caused by the injury, i.e., how the injury affects his employment/profession
Limited Premium + Limited Defence Unlimited LiabilityLoss making Portfolio
Commercial vehicles – 400 to 500% loss ratioPvt. vehicles – 100 to 200% loss ratio
Pvt. Insurance Cos. reluctant to insure under this portfolio
IRDA as regulator set up a TP Pool for commercial vehicles from which all claims were payableTP Pool was dismantled as desired results were not achievedNow declined risk pool has been set upFurther Parliamentary Bill is pending proposing to limit liability of insurers u/s. 163AInsurers would like limited liability to extend to s. 166
Voluntary portion of the risk cover: Comprehensive policy;Covers damage to one’s own vehicle;Payment of compensation is after Survey;S. 64UM of Insurance Act provides that for any loss claimed of more than Rs. 20,000 has to be surveyed by an IRDA licensed Surveyor
Payment on non-standard basis being awarded by courts even in cases where breach of terms and conditions are provedDetariffed regime has enabled the portfolio to growOptions like 0% depreciation policies
More popularly known as Mediclaim policy;Usually covers hospitalization expenses;Each insurers policy has its own add-ons and deductions, e.g., maternity issues;Pre-existing diseases not covered unless continuous policy for 4 years [can be shorter in some policies]Third Party Administrator [who have medical expertise] guide the companies in claim handling
With the coming of various new General Insurance and also specifically Health Insurance companies, incorporation of the following are being looked forward to:
Double benefits, i.e., Compensation of more than bills run up from hospitalization;OPD coverage;Coverage keeping in mind new technlogies and new diseases;Coverage for dental and optical needs, among others
After privatization of industry, competition has grown and to regulate the same, IRDA has come up with several reforms by way of Regulations, such as:
Protection of Policyholders Regulations, 2002Insurance Surveyors and Loss Assessors (Licencing, Professional Requirements and Code of Conduct) Regulations, 2000IRDA (Third Party Administrators - Health Services) Regulations, 2000Insurance Regulatory and Development Authority (Health Insurance) Regulations, 2013
Further in come cases IRDA issued guidelines by which the industry has to conduct its business, like:
Guidelines on Outsourcing of Activities by Insurance Companies – which specifies the core activities which a insurer may not outsourceAnti-Money Laundering /Counter Financing of Terrorism (AML/CFT)-GuidelinesGuidelines on Distance Marketing of Insurance ProductsGuidelines on Insurance repositories and electronic issuance of insurance policiesGuidelines on Standardization in Health Insurance
Service Industry;Goods manufactured / industries offered risk coverage;Affected by the economic health of the country.