INTRODUCTION
The Insurance Regulatory and Development Authority (IRDA) is a national
agency of the Government of India, ba...
NEEDFORTHEESTABLISHMENT:
The law of India has the following expectations from IRDA
i. To protect the interest of and secur...
HISTORY OF INDIAN INSURANCE
In India, insurance has a deep-rooted history. It finds mention in the writings of
Manu ( Manu...
In 1968, the Insurance Act was amended to regulate investments and set
minimum solvency margins. The Tariff Advisory Commi...
AIMs and Objectives
The InsuranceRegulatory and Development Authority aims at reducing costs for
policy holders, raise ret...
VI. To promote fairness, transparency and orderly conduct in financial
markets dealing with insurance and build a reliable...
Duties,Powers and Functions of IRDA
Section 14 of IRDA Act, 1999 lays down the duties, powers and functions of
IRDA:
1. Su...
 adjudication of disputes between insurers and intermediaries or
insurance intermediaries;
 supervising the functioning ...
The Insurance Regulatory and Development Authority (IRDA) were constituted
to regulate and develop insurance business in I...
The main Aim of IRDA is„To protect the interests of the policyholders, to
regulate, promote and ensure orderly growth of t...
Power of Ombudsman
Insurance Ombudsman has two types of functions to perform (1) conciliation,
(2) Award making. The insur...
insurance industry in India. It was constituted by a Parliament of India act
called Insurance Regulatory and Development A...
 As part of this initiative, print advertisements for consumer information
and education about initiatives like Insurance...
survey to assess the levels of insurance awareness in the country. The survey
was undertaken in 29 states/union territorie...
IRDA Documentary Film
In order to sensitize general public about IRDA, its role and initiatives in
insurance sector regula...
Insurance sector regulator Irda opened a regional office at Delhi on January
24th 2014. upgrading its exsiting establishme...
Insurance Act.
But in cases of increasing foreign shareholding in an insurance intermediary or
TPA, the Authority would ne...
The Insurance Regulatory and Development Authority (IRDA) Chairman TS
Vijayan said that the regulator is bringing in Commo...
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IRDA

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IRDA

  1. 1. 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 IndianParliament known as IRDA Act 1999.The Insurance Regulatory and Development Authority IRDA was constituted as anautonomous body to regulate and develop the business of insurance and re-insurance inIndia. The Authority was constituted on April 19, 2000. The Insurance Regulatory andDevelopment Authority Act, 1999, were enacted by Parliament. IRDA was set up in 1996 but it was formally constituted as a regulator of the insurance industry in April 2000.Theobjectives of IRDA are policyholder protection and healthy growth of the insurancemarket.IRDA has constituted the Insurance Advisory Committee and in consultation with thecommittee has brought out seventeen regulations. A leading consumer activist has also been inducted into the Insurance Advisory Committee. In addition, representatives of consumers, industry, insurance agents, women‟s organizations, and other interest groupsare a part of this committee.Insurance Regulatory and Development Authority (IRDA, which was constituted by anact of parliament) specify the composition of Authority.The Authority is a ten member team consisting of: (a) A Chairman (b) Five whole-time members; (c) Four part-time members,all members are appointed by the Government of India.
  2. 2. NEEDFORTHEESTABLISHMENT: The law of India has the following expectations from IRDA i. To protect the interest of and secure fair treatment to policyholders. ii. 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. iii. To set, promote, monitor and enforce high standards of integrity, financial soundness, fair dealing and competence of those it regulates. iv. 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. v. To ensure speedy settlement of genuine claims, to prevent insurance frauds and other malpractices and put in place effective grievance redressal machinery. vi. 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. vii. To take action where such standards are inadequate or ineffectively enforced. viii. To bring about optimum amount of self-regulation in day to day working of the industry consistent with the requirements of prudential regulation.
  3. 3. HISTORY OF INDIAN INSURANCE In India, insurance has a deep-rooted history. It finds mention in the writings of Manu ( Manusmrithi ), Yagnavalkya (Dharmasastra ) and Kautilya ( Arthasastra ). The writings talk in terms of pooling of resources that could be re-distributed in times of calamities such as fire, floods, epidemics and famine. This was probably a pre-cursor to modern day insurance. Ancient Indian history has preserved the earliest traces of insurance in the form of marine trade loans and carriers’ contracts. Insurance in India has evolved over time heavily drawing from other countries, England in particular. 1818 saw the advent of life insurance business in India with the establishment of the Oriental Life Insurance Company in Calcutta. This Company however failed in 1834. In 1829, the Madras Equitable had begun transacting life insurance business in the Madras Presidency. 1870 saw the enactment of the British Insurance Act and in the last three decades of the nineteenth century, the Bombay Mutual (1871), Oriental (1874) and Empire of India (1897) were started in the Bombay Residency. This era, however, was dominated by foreign insurance offices which did good business in India, namely Albert Life Assurance, Royal Insurance, Liverpool and London Globe Insurance and the Indian offices were up for hard competition from the foreign companies. In 1914, the Government of India started publishing returns of Insurance Companies in India. The Indian Life Assurance Companies Act, 1912 was the first statutory measure to regulate life business. In 1928, the Indian Insurance Companies Act was enacted to enable the Government to collect statistical information about both life and non-life business transacted in India by Indian and foreign insurers including provident insurance societies. In 1938, with a view to protecting the interest of the Insurance public, the earlier legislation was consolidated and amended by the Insurance Act, 1938 with comprehensive provisions for effective control over the activities of insurers. An Ordinance was issued on 19th January, 1956 nationalising the Life Insurance sector and Life Insurance Corporation came into existence in the same year. The LIC absorbed 154 Indian, 16 non-Indian insurers as also 75 provident societies—245 Indian and foreign insurers in all. The LIC had monopoly till the late 90s when the Insurance sector was reopened to the private sector. The history of general insurance dates back to the Industrial Revolution in the west and the consequent growth of sea-faring trade and commerce in the 17th century. It came to India as a legacy of British occupation. General Insurance in India has its roots in the establishment of Triton Insurance Company Ltd., in the year 1850 in Calcutta by the British. In 1907, the Indian Mercantile Insurance Ltd, was set up. This was the first company to transact all classes of general insurance business. 1957 saw the formation of the General Insurance Council, a wing of the Insurance Associaton of India. The General Insurance Council framed a code of conduct for ensuring fair conduct and sound business practices.
  4. 4. In 1968, the Insurance Act was amended to regulate investments and set minimum solvency margins. The Tariff Advisory Committee was also set up then. In 1972 with the passing of the General Insurance Business (Nationalisation) Act, general insurance business was nationalized with effect from 1st January, 1973. 107 insurers were amalgamated and grouped into four companies, namely National Insurance Company Ltd., the New India Assurance Company Ltd., the Oriental Insurance Company Ltd and the United India Insurance Company Ltd. The General Insurance Corporation of India was incorporated as a company in 1971 and it commence business on January 1sst 1973. This millennium has seen insurance come a full circle in a journey extending to nearly 200 years. The process of re-opening of the sector had begun in the early 1990s and the last decade and more has seen it been opened up substantially. In 1993, the Government set up a committee under the chairmanship of RN Malhotra, to propose recommendations for reforms in the insurance sector.The objective was to complement the reforms initiated in the financial sector. The committee submitted its report in 1994 wherein , among other things, it recommended that the private sector be permitted to enter the insurance industry. They stated that foreign companies be allowed to enter by floating Indian companies, preferably a joint venture with Indian partners. Following the recommendations of the Malhotra Committee report, in 1999, the Insurance Regulatory and Development Authority (IRDA) was constituted as an autonomous body to regulate and develop the insurance industry. The IRDA was incorporated as a statutory body in April, 2000. The key objectives of the IRDA include promotion of competition so as to enhance customer satisfaction through increased consumer choice and lower premiums, while ensuring the financial security of the insurance market. The IRDA opened up the market in August 2000 with the invitation for application for registrations. Foreign companies were allowed ownership of up to 26%. The Authority has the power to frame regulations under Section 114A of the Insurance Act, 1938 and has from 2000 onwards framed various regulations ranging from registration of companies for carrying on insurance business to protection of policyholders’ interests. Today there are 27 general insurance companies including the ECGC and Agriculture Insurance Corporation of India and 24 life insurance companies operating in the country. The insurance sector is a colossal one and is growing at a speedy rate of 15- 20%. Together with banking services, insurance services add about 7% to the country’s GDP. A well-developed and evolved insurance sector is a boon for economic development as it provides long- term funds for infrastructure development at the same time strengthening the risk taking ability of the country.
  5. 5. AIMs and Objectives The InsuranceRegulatory and Development Authority aims at reducing costs for policy holders, raise returns, and increases the cover after death. The objective of creating an insurance repository is to provide policyholders a facility to keep insurancepolicies in electronic form and to undertake changes, modifications and revisions in the insurance policywith speed and accuracy in order to bring about efficiency, transparency and cost reduction in theissuance andmaintenance ofinsurance policies.The objectives mainly include promotion of competition so as to enhance customer satisfaction through increased consumer choice and lower premiums, while ensuring the financial security of the insurance market. The following are the objectives of the Insurance Regulatory and Development Authority: I. To protect the interest of and secure fair treatment to policyholders. II. 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. III. To set, promote, monitor and enforce high standards of integrity, financial soundness, fair dealing and competence of those it regulates. IV. To ensure that insurance customers receive precise, clear and correct informationabout products and services and make them aware of their responsibilities andduties in this regard. V. To ensure speedy settlement of genuine claims, to prevent insurance frauds and other malpractices and put in place effective grievance redressal machinery.
  6. 6. VI. 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. VII. To take action where such standards are inadequate or ineffectively enforced. VIII. To bring about optimum amount of self-regulation in day-to-day working of the industry consistent with the requirements of prudential regulation.
  7. 7. Duties,Powers and Functions of IRDA Section 14 of IRDA Act, 1999 lays down 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,  issue to the applicant a certificate of registration, renew, modify, withdraw, suspend or cancel such registration;  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;  specifying requisite qualifications, code of conduct and practical training for intermediary or insurance intermediaries and agents;  specifying the code of conduct for surveyors and loss assessors;  promoting efficiency in the conduct of insurance business;  promoting and regulating professional organizations connected with the insurance and re-insurance business;  levying fees and other charges for carrying out the purposes of this Act;  calling for information from, undertaking inspection of, conducting enquiries and investigations including audit of the insurers, intermediaries, insurance intermediaries and other organizations connected with the insurance business;  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);  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;  regulating investment of funds by insurance companies;  regulating maintenance of margin of solvency;
  8. 8.  adjudication of disputes between insurers and intermediaries or insurance intermediaries;  supervising the functioning of the Tariff Advisory Committee;  specifying the percentage of premium income of the insurer to finance schemes for promoting and regulating professional organisations referred to in clause (f);  specifying the percentage of life insurance business and general insurancebusiness to be undertaken by the insurer in the rural or social sector; and exercising such other powers as may be prescribed from time to time. Regularity provisions under insurance Act, 1938. Role of the Insurance Regulatory and Development Authority (IRDA)
  9. 9. The Insurance Regulatory and Development Authority (IRDA) were constituted to regulate and develop insurance business in India. As a key part of its role, it is responsible to protect the rights of policyholders. In order to create awareness about IRDA, its role, duties and responsibilities are stated here under:  IRDA provides a certificate of registration to a life insurance company  IRDA is responsible for the renewal, modification, withdrawal, suspension or cancellation of this certificate of registration.  IRDA frames regulations on protection of policyholders' interests.  It offers policyholders the right to voice their complaints against insurers or insurance companies.  The IRDA has set up the grievance redressal cell to take up the complaints of the policyholder.  It specifies the requisite qualifications, code of conduct and practical training for intermediaries or insurance intermediaries and agents.  It specifies the code of conduct for surveyors and loss assessors;  It promotes efficiency in the conduct of insurance businesses;  It promotes and regulates activities of professional organizations connected with life insurance;  It levies fees and other charges to carry out the purposes of the IRDA Act;  It can call for information from, undertake the inspection of, conduct enquiries and investigations including the auditing of insurers, intermediaries, insurance intermediaries and other organizations connected with the business of life insurance;  It specifies the form and manner in which books of account should be maintained and statements of accounts should be rendered by insurers and other insurance intermediaries;  It regulates the investment of funds by insurance companies;  It regulates the maintenance of margins of solvency;  It adjudicates disputes between insurers and intermediaries or insurance intermediaries;  It specifies the percentage of premium income of the insurer to finance schemes for the promotion and regulation of certain specified professional organizations;  It specifies the percentage of life insurance business to be undertaken by an insurer in the rural or social sector; and  It exercises any other powers as may be prescribe PRODUcts& Services offered
  10. 10. The main Aim of IRDA 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.‟ The IRDA does not offer any products on its own but promotes and regulates the companies which do offer such as ICICI Life Prudential, SBI, LIC, GIC, Bharti Axa Life Insurance,etc. However there are many services the IRDA offers. One may say that IRDA is like the RBI of insurance. The services offered are as follows: o grant of registration, licences and renewals to regulated entities such as insurance companies, TPAs, brokers, agents, insurance repositories, web aggregators, referral entities and surveyors. o The Integrated Grievance Management System(IGMS) facilitates online registration of policyholders‟ complaints and helps track their status. o Life Insurance Council and General Insurance Council are a forum that connects the various stakeholders of the sector. It develops and coordinates all discussions between the Government, Regulatory Board(IRDA) and the Public. 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 redressal 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 Insurance Ombudsman 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, GIC and a representative 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.
  11. 11. Power of Ombudsman Insurance 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. Ombudsman's powers are restricted to insurance contracts of value not exceeding Rs. 20 lakhs. The insurance companies are required to honour the awards passed by an Insurance Ombudsman within three months. Public awareness about the role of the institution (IRDA) Insurance Regulatory and Development Authority (IRDA) is an autonomous apex statutory body which regulates and develops the
  12. 12. insurance industry in India. It was constituted by a Parliament of India act called Insurance Regulatory and Development Authority Act, 1999 and duly passed by the Government of India. Its mission 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. But not many people in our country are aware of the institution and its roles, so the institution itself has taken many initiatives to make the public aware about their roles and the importance. Some of them are: BimaBemisaal  'BimaBemisaal' is the brand name for IRDA's insurance awareness campaign.  It is a consumer education initiative and has the tagline "Promoting Insurance. Protecting Insured"  BimaBemisaal educates policyholders about their rights and obligations and informs them about the complaints resolution methods available to them. It also creates awareness about insurance among the general public.  The BimaBemisaal campaign uses various media like print, radio and television. This website is also part of the BimaBemisaal initiative. JagoGrahakJago  IRDA has participated in the “JAGO GRAHAK JAGO” programme of Ministry of Consumer Affairs, Food and Public Distribution, Government of India, which aims to educate consumers.
  13. 13.  As part of this initiative, print advertisements for consumer information and education about initiatives like Insurance Ombudsman channel for dispute resolution have been published and also telecast. IRDA annual seminars 2013 (taken in this case)  IRDA conducts a series of Annual Seminars on Policyholder Protection. As a part of this series, the 4th Seminar on "Policyholder Protection and Welfare" was held in Mumbai on 27th November, 2013.  The seminar was inaugurated by Shri T.S. Vijayan, Chairman, Insurance Regulatory and Development Authority.  He launched the following during the seminar: a. Consumer Affairs Department's Annual Booklet 2012-13 b. Handbook on Surveyors and Loss Assessors c. Documentary Film on IRDA Initiatives d. Animation Films of Comic Book Series - Volume -3 e. Mobile version of Consumer Education Website f. Indian Non-Life Insurance Industry Year Book 2012-13 by General Insurance Council and g. A Report on Spread of Life Insurance Agents in India of Insurance Information Bureau. Insurance Awareness Survey Insurance Regulatory and Development Authority (IRDA) engaged the National Council of Applied Economic Research (NCAER) to carry out a pan-India
  14. 14. survey to assess the levels of insurance awareness in the country. The survey was undertaken in 29 states/union territories. The survey shows that most of the insured are salaried, regular wage earners or self-employed. Insured households possess a high level of education as opposed to uninsured households which are mostly illiterate. a. Geographic Analysis: The report contains a geographical analysis of the parameters and it is interesting to study the patterns in various states. (this requires more info from the survey or we can drop it in this position) b. Purpose of insurance: A higher percentage of insured households, as compared to uninsured households, are aware that the purpose of insurance is to compensate for losses due to unforeseen events. c. Source of Information: The major source of any information for both the insured and uninsured is television. But when it comes to insurance the major source is insurance agents. d. Of the insured households 97% feel that insurance is relevant for them. Even among the uninsured, 57% feel that insurance is relevant for them. e. Relevance of Insurance: The fear of accidents and untimely death makes them think of insurance. Among those who did not think that insurance is relevant, the attitude is that they would rather enjoy the present than think of securing the future. There is a general feeling that insurance simply takes away hard-earned money. f. Perceptions of Insurance: More than half of the insured households think that insurance is both a savings and a protection tool. g. Decision to take insurance: The decision is majorly influenced by agents, friends and relatives. There are certain regional variations as to whose influence predominates and this is brought out in the report. h. Life and Non-life Insurance: For purposes of identifying the universe of insured, the survey considered those who held life insurance. Among them, it was noted that only 31% had motor insurance and 6% health insurance.
  15. 15. IRDA Documentary Film In order to sensitize general public about IRDA, its role and initiatives in insurance sector regulation and development as well as policyholder protection and welfare, a documentary film has been prepared for extensive use which has been recently launched by IRDA. This documentary film not only disseminates generic information about insurance but also highlights various initiatives taken by IRDA in the field of educating customers and redressal of grievances. Apart from these initiatives the institution has taken many other fun and interactive measures like essay writing competition, comic strips, vernacular comic stories, t.v commercials, jingles, radio jingles, newspaper articles and many more to add on to increase the awareness in a large scale manner. Recent developments and other news on irda IRDA Expands and therefore creates awareness
  16. 16. Insurance sector regulator Irda opened a regional office at Delhi on January 24th 2014. upgrading its exsiting establishment. The new set-up located at Parliament Street will focus on spreading consumer awareness and handling grievances. It will also provide support for inspection of insurance companies located in the northern region. Irda Chairman T S Vijayan inaugurated the office that will be headed by a joint director and have 10 other officers and employees. "Some of the functions of Consumer Affairs Department, Inspection Department and Surveyors Department of Irda will be handled from this office," Irda said in a release. The office will also be responsible for granting/renewal/ modification of licenses of surveyors and loss assessors. "With the above functions at Delhi, Irda will be able to work more closely with the policyholders and to better position the Irda to supervise the regulated entities in the area," the release said. One more regional office will be opened shortly in Mumbai, Irda said. IRDA forms committee on FDI in insurance intermediaries, TPAs As per the existing norms, the aggregate shareholding of a foreign company cannot exceed 26 per cent in an insurance company. No such stipulation limits the foreign shareholding in cases of insurance intermediaries. However, the Insurance Regulatory and Development Authority (IRDA), keeping in mind that the insurance industry is in nascent stage, has limited the holdings of a foreign company to 26 per cent in the case of insurance brokers and TPAs IRDA said that it was receiving references from various stakeholders requesting it to consider increasing the foreign shareholding in insurance brokers from the existing 26 per cent to 100 per cent as it would not require any change in the
  17. 17. Insurance Act. But in cases of increasing foreign shareholding in an insurance intermediary or TPA, the Authority would need to undergo amendments in the Insurance Act. Also, there is a long pending Insurance Bill which seeks to raise the FDI cap in the sector to 49 per cent from existing 26 per cent. The Insurance Bill that seeks to raise FDI in insurance sector to 49 per cent has been pending in Rajya Sabha since 2008. Service Tax Applicable to its companies for its services w.e.f. 1st Jan 14: IRDA Going by the provisions of the Finance Bill, 2012, the Insurance Regulatory and Development Authority (IRDA) will collect service tax from January 1. The regulator will collect the tax on several services, according to a release by IRDA on Wednesday. The IRDA is required to collect the tax for services such as grant of registration, licences and renewals to regulated entities such as insurance companies, TPAs, brokers, agents, insurance repositories, web aggregators, referral entities and surveyors. The authority, at its meeting held on December 31, 2013, has approved the collection of applicable service tax on the services rendered by the IRDA. The receivers of the above mentioned services are expected to add the service tax component while making the remittances to the authority, the release stated. in the insurance sector, IRDA (the insurance regulator) has prohibited service providers such as TPAs from trading in information. The IRDA has permitted insurers to purchase customer databases only from IRDA-licensed referral companies. IRDA to bring Common Service Centres to sell policies In six months time, CSCs may come in full-fledged manner, Vijayan said
  18. 18. The Insurance Regulatory and Development Authority (IRDA) Chairman TS Vijayan said that the regulator is bringing in Common Service Centres (CSCs) as insurance brokers to sell policies in rural areas. CSCs offers web-enabled e-governance services in rural areas. In six months time, CSCs may come in full-fledged manner, Vijayan said. Mr Vijayan was speaking at an interactive session organised by the Federation of Andhra Pradesh Chambers of Commerce and Industry (FAPCCI) on Friday. Vijayan said the aim of the project is to ensure that insurance penetration goes up in rural areas. CSCs will be selling simple insurance products such as tractor insurance, vehicle insurance, he said.

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