Insurance and Development Authority

Introduction The Insurance Regulatory and Development Authority (IRDA) is a national agency of the Government of India, based in Hyderabad. It was formed by an act of Indian Parliament known as IRDA Act 1999, which was amended in 2002 to incorporate some emerging requirements. Mission of IRDA as stated in the act is “to protect the interests of the policyholders, to regulate, promote and ensure orderly growth of the insurance industry and for matters connected therewith or incidental thereto.

” Duties,Powers and Functions of IRDA Section 14 of IRDA Act, 1999 laysdown the duties,powers and functions of IRDA (1) Subject to the provisions of this Act and any other law for the time being in force, the Authority shall have the duty to regulate, promote and ensure orderly growth of the insurance business and re-insurance business.

(2) Without prejudice to the generality of the provisions contained in sub-section (1), the powers and functions of the Authority shall include, (a) issue to the applicant a certificate of registration, renew, modify, withdraw, suspend or cancel such registration; (b) protection of the interests of the policy holders in matters concerning assigning of policy, nomination by policy holders, insurable interest, settlement of insurance claim, surrender value of policy and other terms and conditions of contracts of insurance; (c) specifying requisite qualifications, code of conduct and practical training for intermediary or insurance intermediaries and agents; (d) specifying the code of conduct for surveyors and loss assessors; (e)

Promoting efficiency in the conduct of insurance business; (f) promoting and regulating professional organisations connected with the insurance and re-insurance business; (g) levying fees and other charges for carrying out the purposes of this Act; (h) calling for information from, undertaking inspection of, conducting enquiries and investigations including audit ofthe  insurers, intermediaries, insurance intermediaries and other organisations connected with the insurance business; (i)

Control and regulation of the rates, advantages, terms and conditions that may be offered by insurers in respect of general insurance business not so controlled and regulated by the Tariff Advisory Committee under section 64U of the Insurance Act, 1938 (4 of 1938); (j) specifying the form and manner in which books of account shall be maintained and statement of accounts shall be rendered by insurers and other insurance intermediaries; (k) regulating investment of funds by insurance companies; (l) regulating maintenance of margin of solvency;

(m) adjudication of disputes between insurers and intermediaries or insurance intermediaries; (n) supervising the functioning of the Tariff Advisory Committee; (o) specifying the percentage of premium income of the insurer to finance schemes for promoting and regulating professional organisations referred to in clause (f); (p) specifying the percentage of life insurance business and general insurance business to be undertaken by the insurer in the rural or social sector; and (q) exercising such other powers as may be prescribed Expectations The law of India has following expectations from IRDA 1.

To protect the interest of and secure fair treatment to policyholders; 2. To bring about speedy and orderly growth of the insurance industry (including annuity and superannuation payments), for the benefit of the common man, and to provide long term funds for accelerating growth of the economy; 3. To set, promote, monitor and enforce high standards of integrity, financial soundness, fair dealing and competence of those it regulates; 4.

To ensure that insurance customers receive precise, clear and correct information about products and services and make them aware of their responsibilities and duties in this regard; 5. To ensure speedy settlement of genuine claims, to prevent insurance frauds and other malpractices and put in place effective grievance redressal machinery; 6. To promote fairness, transparency and orderly conduct in financial markets dealing with insurance and build a reliable management information system to enforce high standards of financial soundness amongst market players; 7. To take action where such standards are inadequate or ineffectively enforced; 8.

To bring about optimum amount of self-regulation in day to day working of the industry consistent with the requirements of prudential regulation. Advisory Committee IRDA has a Chairman and some permanent and some part time members but the regulations are enacted under the guidance of a statutory advisory committee. The advisory committee consists of following individuals and ex-officio authorities: Mr Hari Narayana is the third Chairman of IRDA. IRDA Journal is available as soft copy in its website. Unlike other Indian administrative Regulatory Agencies IRDA is perceived as a silent regulator with activities confined to its local existence. Amendment in Insurance Regulatory and Development Authority.

In exercise of the powers conferred by section 32C read with section 32B of the Insurance Act, 1938 (4 of 1938), the Authority, in consultation with the Insurance Advisory Committee, hereby makes the following Regulations to further amend the Insurance Regulatory and Development Authority (Obligations of Insurers to Rural or Social Sectors) Regulations, 2002, notified on October 17, 2002 in the Gazette of India F. No. IRDA/Reg/10/2002 and amended on December 26, 2005 in the Gazette of India F. No. IRDA/Reg/4/2005/37, namely :— 1. Short title and commencement. —(1)

These regulations may be called the Insurance Regulatory and Development Authority (Obligations of Insurers to Rural or Social Sectors) (Third Amendment) Regulations, 2008.

(2) They shall come into force on the date of their publication in the Official Gazette. (3) In the Insurance Regulatory and Development Authority (Obligations of Insurers to Rural or Social Sectors) Regulations, 2002, (i)The third proviso to Regulation 3 shall stand deleted. (ii)After Regulation 3A as inserted by the Insurance Regulatory and Development Authority (Obligation of Insurers to Rural or Social Sectors) (Amendment) Regulations, 2005, the following Regulation 3B shall be added : “3B. Obligations after the Sixth Financial Year. — (l)(a) Rural Sector (i)in respect of a life insurer, (I)eighteen per cent in the seventh financial year;

(II)nineteen per cent in the eighth and ninth financial years; (III)twenty per cent in the tenth financial year, of the total policies written direct in that year; (ii)in respect of a general insurer, (I)five per cent in the seventh financial year; (II)six per cent in the eighth financial year; (III) seven per cent in the ninth and tenth financial years; of the total gross premium income written direct in that year. (b) Social sector (i)in respect of all insurers, (I)twenty five thousand lives in the seventh financial year; (II)thirty five thousand lives in the eighth financial year; (III)forty five thousand lives in the ninth financial year; (IV) fifty five thousand lives in the tenth financial year.

(2) The obligations of the insurers towards the rural and social sectors for the tenth financial year shall also be applicable in respect of the financial years thereafter. ” (iii)After Regulation 4, the following Regulation 4A shall be added:— “4A. Obligations of the existing insurers for the financial years 2007-08 to 2009-10. (1) The obligations of the existing insurers as on the date of the commencement of the Insurance Regulatory and Development Authority Act, 1999 towards the rural and social sectors from the financial year 2007-08 to the financial year 2009-10 are as under :— (a) Life Insurance Corporation of India,— (i)Rural Sector, (I)twenty four per cent in the financial year 2007-08;

(II)twenty five per cent in the financial years 2008-09 and 2009-10, of the total policies written direct in that year; (ii)Social Sector, (I)Twenty lakh lives in the financial years 2007-08, 2008-09 and 2009-10. (b) General Insurers, (i)Rural Sector,— (I)six per cent in the financial year 2007-08; (II)seven per cent in the financial years 2008-09 and 2009-10, of the total gross premium income written direct in that year; (ii)Social Sector,— (I)for the financial year 2007-08 the average of the number of lives covered by the respective insurer in the social sector from the financial years 2002-03 to 2004-05 or 5. 50 lakh lives, whichever is higher ;

(II)for the financial year 2008-09, the obligations of the existing insurers shall increase by 10 per cent over the number of persons prescribed for the financial year 2007-08 ; (III)for the financial year 2009-10, the obligations of the existing insurers shall increase by 10 per cent over the number of persons prescribed for the financial year 2008-09. (2) The obligations of the insurers, towards the rural and the social sectors for the financial year 2009-10 shall also be applicable in the financial years thereafter”. (iv) After Regulation 4A, the following Regulations 5, 6 and 7 shall be added : “5. Notes applicable to Regulations 3, 3A, 3B, 4 and 4A. —(1) The term ‘lives’ referred to in Regulations 3, 3A, 3B and 4A in respect of all insurers refers to human lives insured as at the end of each financial year.

(2) Re-insurance premium shall not be included while calculating the obligations of the insurers in respect of the rural and social sectors. (3) The Authority may prescribe or revise the obligations as specified in these Regulations from time to time. 6. Compliance. —(1) For the purpose of these Regulations, compliance with the obligations towards the rural sector in respect of both general and life companies shall be based on the sale of products conforming to the proviso that all such contracts meet the stipulation as to the minimum amount of cover as laid down in Schedules I and II of the Insurance Regulatory and Development Authority (Micro Insurance) Regulations, 2005.

(2) For the purpose of these Regulations, compliance with the obligations towards the social sector in respect of both general and life companies shall be based on the sale of products conforming to the proviso that all such contracts meet the stipulations as to the cover laid down in Schedules I and II of Insurance Regulatory and Development Authority (Micro Insurance) Regulations, 2005. 7. Submission of returns.

Every insurer shall submit a return, as part of the financial returns to be submitted under the Insurance Regulatory and Development Authority (Preparation of Financial Statements and Auditors Report of Insurance Companies) Regulations, 2002, the rural and social sector obligations specified under these regulations and disclose the level of compliance achieved during the said year. Such reporting shall form part of the ‘Notes to the Accounts’. ”

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