2. CONTENTS
Meaning of Insurance
Financial System
Establishment of IRDAI
Recommendations
Constitution of IRDAI
Meaning of IRDAI
Composition of Authority
Tenure of the office of Chairman and other members
Functions
Duties
Objectives
Removal from office
Ombudsman
Appointment of Ombudsman
Complaints related to
Claim Documents
Process of loss of adjustment
Effects of IRDAI
Case laws
4. Insurance is a way of reducing your
potential financial loss or hardship.
It can help to cover the cost of
unexpected events such as theft,
illness, property damage and it also
helps insuring person’s life.
5.
6. ESTABLISHMENT OF IRDAI :
In 1993 : Government setup a committee.
Headed by : R.N. Malhotra (Former Governor
of RBI).
In 1994 : Malhotra Committee submitted
report.
7. RECOMMENDATIONS :
Private Sector Entry to Insurance Market.
Up to 50% reduction in Government stakes.
Foreign Companies should Enter.
Paid-up capital 1 billion.
Cannot take both life insurance and general insurance.
Independent Regulatory Authority for Insurance
Sector.
8. CONSTITUTION OF IRDAI :
In 1999 : IRDAI Act was constituted.
In April 2000 : IRDAI came into existence.
H.Q. : Delhi (2000), Hyderabad(2001)
Chairman : Subhash Chandra Khontia.
9. IRDAI is an autonomous, statutory
agency tasked with regulating and
promoting the Insurance & Re-
insurance in India.
10. 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.
The Authority is a ten member team consisting of :-
a) A Chairman;
b) five whole-time members;
c) four part-time members,
(all appointed by the Government of India)
11. TENURE OF OFFICE OF
CHAIRPERSON AND OTHER
MEMBERS :
I. The Chairperson and every other whole-time member
shall hold office for a term of 5 years from the date
on which he enters upon his office and shall be
eligible for reappointment :
Provided that no person shall hold office as a
Chairperson after he has attained the age of 65 years:
Provided further that no person shall hold office as a
whole-time member after he has attained the age of 62
years.
12. II. A part-time member shall hold office for a term not
exceeding 5years from the date on which he enters
upon his office.
III. Notwithstanding anything contained in
sub-section (1) or sub-section (2), a member may-
(a) relinquish his office by giving in writing to the
Central Government notice of not less than 3 months;
or
(b) be removed from his office in accordance with the
provisions of section.
13. FUNCTIONS OF IRDA :
As defined by the IRDA Act 1999, IRDA performs the
following broad functions :
Ensure orderly growth of the insurance industry.
Protect interest of policy holder.
Issue consumer protection to guidelines to insurance
companies.
Grant modify, and suspend license for insurance
companies.
Lay down procedures for accounting policies to be adopted
by the insurance companies.
Inspect and audit of insurance companies and other related
agencies.
Re-insurance limit monitoring.
14. FUNCTIONS CONTINUES :
Vetting of accounting standards, transparency
requirements in reporting.
Ensure the health of the industry by preventing
sickness through appropriate action.
Publish information about the industry.
Prescribe qualification and training needs of agents.
Monitor the charges for various services by insurance
company.
Monitor investment.
15. DUTIES AND RESPONSIBILITIES :
According to the Section 14 of IRDA Act of 1999 there
are certain duties :
o To regulate, promote and ensure orderly growth of the
insurance business and re-insurance business.
o Promoting efficiency is the conduct of business.
o To regulate the investment of funds by insurance
companies.
o Protection of the interest of the policy holders.
o 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.
16. o Adjudication of disputes between insurers and
intermediaries.
o To issue a certificate of registration and powers to
renew, modify, withdraw, suspend or cancel the
registration.
o Supervising the functions of the Tariff Advisory
Committee.
o To regulate and control the rates, advantages, terms
and conditions that may be offered by insurers.
o To regulate the maintenance of margin of solvency.
17. MAJOR OBJECTIVES OF THE IRDA
ACT :
To promote orderly growth of insurance industry in the
country, including registration of the insurance companies.
To administer the provisions of the insurance act.
To protect interests of policy holders and investors.
To device control activities needed for smooth functioning
of the insurance companies including investment of funds
and the solvency requirements to be maintained by
insurance companies.
To lay down the accounting methodology to be adopted.
To adjudicate on disputes.
18. REMOVAL FROM THE OFFICE :
The Central Government may remove from office
any member who-
Is act as an insolvent.
Has become physically or mentally incapable of acting
as a member.
Has been convicted of any offence which, in the
opinion of the Central Government, involves moral
turpitude.
Has acquired such financial or other interest as is
likely to affect prejudicially his functions as a member.
19. OMBUDSMAN :
The institution of Insurance Ombudsman was created
by Government of India Notification dated 11th
November, 1998.
Purpose is to quick disposal of the grievances of the
insured.
The institution helps to generate and sustain the faith
and confidence amongst the consumers and insurers.
20. APPOINTMENT OF OMBUDSMAN :
The appointment ha to be done with the
recommendations of the committee
comprising of Chairman, IRDA, Chairman,
LIC, Chairman GIC and a representative of
the Central Government.
21. COMPLAINTS MAY RELATE TO :
Any partial o total repudiation of claims by the
insurance companies.
Dispute with regard to premium paid or payable in
terms of the policy.
Delay in settlement of claims.
Non-issuance of any insurance document to customers
after receipt of premium.
22. CLAIMS DOCUMENTS:
Insurance Policy
Claim form
FIR, Fire Brigade Report
Accounting statements like past 3 years Balance
Sheets, Stock Registers, Purchase and Sales invoices,
Sales tax returns, Excise duty records, Profit and
Loss accounts etc.
Act of God Peril- newspaper cuttings, photographs
and meteorological reports.
23. If company proposes to settle the claim then
Letter o Subrogation, the discharge voucher, if
the policy is subject to Agreed Bank Clause (if
Bank’s or other Financial Institution’s interest is
involved, the discharge voucher has to be signed
by their authorised signatories).
24. PROCESS OF LOSS ADJUSTMENT :
Inspection of the scene.
Identification of property insured.
Securing evidence – Photographic, sample, telltale.
Examination of probable cause – process of elimination of
probable causes, acceptance of more than one probable
cause of loss, elimination of loss due to exception or
exclusion.
Verification of damage – physical evidence, identification
from physical evidence, absence of physical evidence,
nature of goods involved, properties of goods involved,
duration of fire.
Assessment of the damage.
Calculation of value at risk.
25. o To specify the percentage of premium income of the
insurer to finance schemes.
o To specify the percentage of life insurance business
and general insurance business to be undertaken by
the insurer in the rural or social sector.
o Exercising such other powers as may be prescribed.
26. EFFECTS OF IRDAI :
Effect on regulation of Insurance Industry.
Effect over Awareness about Insurance.
Effect over Insurance Market.
Effect over Development of Insurance Product.
Effect on Competition between Private & Public
Sector.
Effect over banks and post offices.
