Regulatory Bodies in India

Vivek College Of Commerce
Insurance Regulatory and Development Authority of India Page 1
Chapter 1
Introduction
Insurance Regulatory and Development Authority of India.
Insurance Regulatory and Development Authority of India (IRDAI) 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 and duly passed
by the Government of India.
The agency operates from its headquarters
at Hyderabad, Telangana where it shifted from Delhi in
2001.
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. The FDI limit in insurance sector was raised to 49% in July 2014.
Abbreviation IRDA
Headquarters 3rd Floor, Parisrama Bhavan, Basheer
Bagh, Hyderabad,Telangana
Location Hyderabad, Telengana
Chairman, IRDA T.S. Vijayan
Website Irda.gov.in

Overview-
The Indian insurance industry is hugely driven by higher disposable incomes,
changing demographics, government efforts, launch of new products, lesser
complexities and entry of enormous foreign players. The sector is not only
outpacing India's economic growth figures, but is also standing strong as an
important financial segment.
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 opened
up the market in August 2000 with the invitation for application for registrations.
Foreign companies were allowed ownership of up to 26%. Today there are 24
general insurance companies including the ECGC and Agriculture Insurance
Corporation of India and 23 life insurance companies operating in the country.
In the general insurance industry, there was a growth of 24 per cent in first
three quarters of 2011-12 in gross written premium collected. The general insurance
industry collected premium of Rs 42,023.3 crore (US$ 8.51 billion) by writing new
policies during the period.
The Indian life insurance industry has emerged as the mainstay of entire
insurance space with Rs 2.9 trillion (US$ 58.7 billion). With over 35 crore life
insurance policies in force, the industry has registered remarkable growth since its
privatization in 2000. The 24 life insurance players' premiums collected in April-
December 2011 stood at Rs 71, 953.54 crore (US$ 14.59 billion) while the industry
sold about 27.24 million policies during the period, according to data collected by
the Insurance Regulatory and Development Authority (IRDA).
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.
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.
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. IRDAI is a ten member body consisting of-
 A Chairman,-(T.S. Vijayan)
 Five 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.

Chapter 2
History of 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.
 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.
 The Insurance Amendment Act of 1950 abolished Principal Agencies.
However, there were a large number of insurance companies and the level of
competition was high. There were also allegations of unfair trade practices.
The Government of India, therefore, decided to nationalize insurance
business.
o 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.
 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 1 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.

 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, former Governor of RBI, to propose
recommendations for reforms in the insurance sector.
 In December, 2000, the subsidiaries of the General Insurance Corporation of
India were restructured as independent companies and at the same time GIC
was converted into a national re-insurer. Parliament passed a bill de-linking
the four subsidiaries from GIC in July, 2002.
Today there are 28 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.

a.) Insurance Repository-
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”, e.g. CDSL
Insurance Repository Limited (CDSL IR)
The Insurance Repository in India is a database of insurance policies. It
allows policy holders to make revisions to a policy. It launched on 16 September
2013. It is the world's first of its kind.
India's Insurance Regulatory and Development Authority has issued licenses to
five entities to act as Insurance Repositories:
1. CDSL Insurance Repository Limited (CDSL IR)
2. SHCIL Projects Limited
3. Karvy Insurance repository Limited
4. National Insurance-policy Repository by NSDL Database Management
Limited
5. CAMS Repository Services Limited

b.) Missions
 To protect the interest of and secure fair treatment to policyholders;
 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;
 To set, promote, monitor and enforce high standards of integrity, financial
soundness, fair dealing and competence of those it regulates;
 To ensure speedy settlement of genuine claims, to prevent insurance
frauds and other malpractices and put in place effective grievance
redressal machinery;
 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;
 To take action where such standards are inadequate or ineffectively
enforced;
 To bring about optimum amount of self-regulation in day-to-day working
of the industry consistent with the requirements of prudential regulation.

Chapter 3
a.) Functions of IRDA
“... 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 functions of IRDA are laid down in section 14 of IRDA Act, 1999 as:
To regulate, promote and ensure orderly growth of the insurance business and
re-insurance business. Issue to the applicant a certificate of registration, renew,
modify, withdraw, suspend or cancel such registration.
To 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.
To Specifying requisite qualifications,
code of conduct and practical training for
intermediary or insurance intermediaries and
agents and Specifying the code of conduct for surveyors and loss assessors.
To 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)
To Regulating investment of funds by insurance companies, regulating
maintenance of margin of solvency, adjudication of disputes between insurers and
intermediaries or insurance intermediaries Specifying the percentage of premium
income of the insurer to finance schemes for promoting and regulating professional
organizations referred to in clause 2.6 and Specifying the percentage of life

insurance business and general insurance business to be undertaken by the insurer
in the rural or social sector.
b.) Powers of IRDA
Section 14 of IRDAI Act, 1999 lays down the duties, powers of IRDAI.
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.
Without prejudice to the generality of the provisions contained in sub-section (1),
The Powers 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;
 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 organizations referred to
in clause (f);
 specifying the percentage of life insurance business and general insurance
business to be undertaken by the insurer in the rural or social sector; and
 exercising such other powers as may be prescribed

c.) Expectations from IRDA
The IRDA law has been enacted with following expectations from IRDA:-
 To protect the interests of and secure fair treatment pertaining to
policyholders.
 To bring about speedy, regulated 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
Indian economy.
 To set, promote, monitor and enforce high standards of competence, fair
dealing, financial soundness and integrity of those that comes under the
purview of its juridiction and regulation.
 To ensure that insurance policyholders and prospective customers receive
precise, clear, correct and factual information regarding Insurance products
and services being offered and make them aware of their responsibilities.
 To ensure speedy settlement of genuine insurance claims, to prevent
insurance frauds, misappropriation of funds and other malpractices.
 To promote, regulate and oversee effective functioning of grievance
redressal machinery and disposing off grievances in a swift manner.
 To promote fairness, transparency and orderly conduct in financial markets
dealing with insurance and build reliable MIS (Management Information
Systems) to enforce high standards of financial soundness.
 To take appropriate and corrective measures where such standards are felt
inadequate or remain ineffectively enforced.
 To bring about optimum amount of self-regulation in day to day working of
the insurance sector consistent with the requirements of prudential
regulation.

d.) Classification of Insurance Business
Insurance business is divided into four classes namely:
1) Life Insurance
2) Fire Insurance
3) Marine Insurance and
4) Miscellaneous Insurance
Life Insurers transact life insurance business whereas General (non-Life)
Insurers transact the rest. No composites are permitted as per law.
Life Insurance
Under Life Insurance, the highly popular insurance products are: Endowment
Assurance (Participating) and Money Back (Participating). More than 80% of the
life insurance business is derived from these products.
General Insurance:
Under General (Non-Life) Insurance, Fire and Miscellaneous insurance
businesses are predominant. Motor Vehicle insurance is compulsory under Indian
Law. Tariff Advisory Committee (TAC) lays down tariff rates for some of the
general insurance products. In India, Health Insurance is placed under General
Insurance category. Till date the penetration of Health Insurance in India has been
miniscule and is in the process of making a bigger impact amongst Indian masses.

Bancassurance
Bancassurance symbolizes the convergence of banking and insurance. The
term has its origins in France and involves distribution of insurance products
through a bank's branch network. While bancassurance has developed into a
tremendous success story in Europe, it is a relatively new concept in Australia and
Asia.
Bancassurance refers to the arrangement under which a bank sells an insurance
company’s products. Insurance companies, particularly new players and those not
promoted by banks, typically pay a certain amount as commission to banks for
using their infrastructure. According to the bancassurance draft guidelines, upfront
commissions or discounted sale of equity by the insurers should be amortized
within three years.
The Insurance Act allows only those companies registered under the
Companies Act to become corporate agents. This gives the new generation and old
private sector banks a head start over Public sector banks , which are technically not
eligible to sell risk products. Most new insurers have entered into memoranda of
understanding with banks to use their branches as outlets for marketing standard
products.
IRDA, IBA & RBI are in discussions to iron out the various issues in the
distribution of products.

Microinsurance
Micro insurance is a term increasingly used to refer to insurance
characterized by low premium and low caps or low coverage limits, sold as part of
atypical risk-pooling and marketing arrangements, and designed to service low-
income people and businesses not served by typical social or commercial insurance
schemes.
At present, all insurance companies, both life and non-life in India, are
mandated to do 20 per cent of their business from micro and rural insurance
policies. In 2009-10, life insurers earned new business premium of Rs 401.641
crore from micro-insurance policies. Micro-insurance is not a profitable business
segment for insurance companies because the premium generated is very low.
Partial List of Micro Insurance Products
 LIC's Jeevan Mangal
 SBI Life Grameen Super Suraksha
 ICICI Pru Sarv Jana Suraksha
 Bajaj Allianz Jana Vikas Yojana
 Birla Sun Life Insurance
 Bima Suraksha Super
 ING Vysya Saral Suraksha
 Met Vishwas
 Tata AIG Sumangal Bima Yojana
 Sahara Sahayog
 SUD Life Paraspar Suraksha Plan
 DLF Pramerica Sarv Suraksha
 IDBI Fortis Group Microsurance Plan

Chapter 4
Customer Protection & Insurance Ombudsman-
For providing protection to Indian consumers against malpractices and
gullible brokers who are out to fleece the customers by raking in quick profits,
IRDA has appointed Ombudsman in 12 cities across India to specifically deal with
Insurance Grievances and speedydisposal of such cases. In case if a policyholder is
dissatisfied by the outcome or the decision taken by the Insurance Company, such
an individual has the liberty to approach the Insurance Ombudsman as a last resort
after exhausting various options. Each Ombudsman has been empowered to redress
customer grievances in respect of insurance contracts on personal lines where the
insured amount is less than Rs. 20 lakhs, in accordance with the Ombudsman
Scheme. Addresses of Ombudsman can be obtained from the offices of LIC and
other insurers (or Insurance Companies).
Insurance 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 (or policyholders) and to mitigate their
problems involved in redressal of such customer grievances. This institution is of
great importance and relevance for protecting the interests of policyholders as well
as generating public confidence in the Insurance system and its associated
processes. The institution has helped to generate and sustain the faith and
confidence amongst the consumers and insurers across India.
IRDA has set up Ombudsman offices across 12 cities in India. Each
ombudsman is empowered to redress customer grievances and complaints in respect
of insurance contracts on personal lines where the insured amount is less than Rs 20
lakhs, in accordance with the guidelines of Ombudsman Scheme as specified in
IRDA Act.

The offices of twelve Insurance Ombudsmen across India are located at
following cities:
1) Bhopal
(2) Bhubaneswar
(3) Cochin (Ernakulam)
(4) Guwahati
(5) Chandigarh
(6) New Delhi
(7) Chennai
(8) Kolkata
(9) Ahmedabad
(10) Lucknow
(11) Mumbai
(12) Hyderabad
The Ombudsman may hold sitting at various places within the area of their
respective jurisdictions in order to expedite disposal of complaints in a swift and
amicable manner.
Appointment of Insurance Ombudsman
The governing body of insurance council issues orders pertaining to the
appointment of Insurance Ombudsman on the recommendations of the committee
comprising of Chairman - IRDA, Chairman - LIC, Chairman - GIC and a
representative of the Central Government. Under Section 40 C of the Insurance Act,
1938, Insurance council comprises of members of both - the Life Insurance Council
and General (Non-Life) Insurance Council, who are representatives of insurance
companies.

Eligibility
Individuals for Insurance Ombudsman are drawn from Insurance Sector,
Civil Services and Judicial Services, who are renowned and distinguished in their
respective fields with a clean public image not embroiled in any controversy.
Terms of office
An Insurance Ombudsman is appointed for a term of three years or till the
incumbent attains the age of 65 years, whichever is earlier. Re-appointment is not
permitted under the IRDA Act.
Office Management
The Ombudsman has a secretarial staff provided by the insurance council to
assist him/her in discharging his duties in an efficient and prudent manner. The total
expenses incurred on Insurance Ombudsman and staffs are incurred by the
Insurance companies who are the members of the insurance council in such
proportion that may be decided by the governing body – IRDA. It must be noted
that members of insurance council are accorded official recognition by IRDA.

Chapter 5
Insurance Companies Operating In India
LIFE INSURERS
Public Sector Private Sector
1 Life Insurance Corporation of
India
1Aegon Religare Life Insurance Co. Ltd
2 Aviva Life Insurance Co. Ltd
3 Bajaj Allianz Life Insurance Co. Ltd
4 Bharti AXA Life Insurance Co. Ltd
5 Birla Sun Life Insurance Co. Ltd.
6 Canara HSBC OBC Life Insurance Co. Ltd
7 DLF Pramerica Life Insurance Co. Ltd.
8 Edelweiss Tokio Life Insurance Co. Ltd.
9 Future Generali Life Insurance Co. Ltd.
10 HDFC Standard Life Insurance Co. Ltd.
11 ICICI Prudential Life Insurance Co. Ltd.
12 IDBI Federal Life Insurance Co. Ltd.
13 ING Vysya Life Insurance Co. Ltd.
14 IndiaFirst Life Insurance Co. Ltd.
15 Kotak Mahindra Old Mutual Life Insurance
Co. Ltd.
16 Max New York Life Insurance Co. Ltd.
17 MetLife India Insurance Co. Ltd.
18 Reliance Life Insurance Co. Ltd.
19 Sahara India Life Insurance Co. Ltd.
20 SBI Life Insurance Co. Ltd.
21 Shriram Life Insurance Co. Ltd.

22 Star Union Dai-ichi Life Insurance Co. Ltd.
23 TATA AIG Life Insurance Co. Ltd.
NON LIFE INSURERS
New India Assurance Co. Ltd. Bajaj Allianz General Insurance Co. Ltd.
National Insurance Co. Ltd. Bharti AXA General Insurance Co. Ltd
The Oriental Insurance Co. Ltd Cholamandalam MS General Insurance Co. Ltd
United India Insurance Co. Ltd Future Generally India Insurance Co. Ltd.
Specialized Insurers HDFC Ergo General Insurance Co. Ltd
Export Credit Guarantee
Corporation Ltd.
ICICI Lombard General Insurance Co. Ltd.
Agriculture Insurance Co. Ltd IFFCO Tokio General Insurance Co. Ltd.
L & T General Insurance Co. Ltd.
Raheja QBE General Insurance Co. Ltd.
Reliance General Insurance Co. Ltd.
Royal Sundaram Alliance Insurance Co. Ltd.
SBI General Insurance Co. Ltd
Shriram General Insurance Co. Ltd.
TATA AIG General Insurance Co. Ltd.
Universal Sompo General Insurance Co. Ltd.
Standalone Health Insurers
Apollo Munich Health Insurance Co. Ltd.
Max Bupa Health Insurance Co. Ltd.
Star Health and Allied Insurance Co. Ltd
RE – INSURER
General Insurance Corporation of India

Chapter 6
a.) International Affairs of IRDA
The Insurance Regulatory and Development Authority of India (IRDAI) was
constituted as an autonomous bodyto regulate and develop the Indian Insurance
industry. The IRDA was incorporated as a statutory bodyin April, 2000 following the
opening of the Insurance sectorfor private participation. The key objectives of the
IRDA include promotion of Insurance sectorand also to enhance customer
satisfaction through increased consumer choice, while ensuring the financial security
of the Insurance market.
A well-developed and evolved insurance sectoris a boonfor economic
development as it provides long-term funds for infrastructure development at the same
time strengthening the risk taking ability of the country.
The IRDAI has been extending supportto the delegates of developing/ less
developed countries in the form of providing technical inputs based on their
requirement, with an objective to improve and enhance their knowledge on various
aspects of Insurance.

b.) Public Disclosures
o Public disclosures in Life Insurance
 AEGON Religare Life Insurance Co. Ltd.
 Aviva Life Insurance Co. Ltd.
 Bajaj Allianz Life Insurance Co. Ltd.
 Bharti AXA Life Insurance Co. Ltd.
 Birla Sun Life Insurance Co. Ltd.
 Canara HSBC OBC Life Insurance Co. Ltd.
 DHFL Pramerica Life Insurance Co. Ltd.
 Edelweiss Tokio Life Insurance Co. Ltd.
 Exide Life Insurance Co. Ltd.
 Future generali Life Insurance Co. Ltd.
o Public disclosures in Non-Life Insurance
 AIC
 Apollo Munich
 Bajaj Allianz
 Bharti Axa
 Cholamandalam
 Cigna TTK
 ECGC Ltd.
 Future Generali
 GIC of India
 HDFC ERGO

c.) Right to Information Act, 2005 for IRDA
The Government of India has enacted the Right to Information Act, 2005
(http://www.persmin.nic.in) which has come into effect from October13, 2005. The
Right to Information under this Act is meant to give to the citizens of India access to
information under control of public authorities to promote transparency and
accountability in these organisations. The Act, under Sections 8 and 9, provides for
certain categories of information to be exempt from disclosure. The Act also provides
for appointment of a Chief Public Information Officer to deal with requests for
information.
IRDAI’s Obligation under the Act
The Insurance Regulatory and Development Authority of India (IRDAI) is a public
authority as defined in the Right to Information Act, 2005. As such, the Insurance
Regulatory and Development Authority of India is obliged to provide information to
members of public in accordancewith the provisions of the said Act.
Access to the Information held by IRDAI
The right to information includes access to the information which is held by or under
the control of any public authority and includes the right to inspect the work,
document, records, taking notes, extracts or certified copies of documents / records
and certified samples of the materials and obtaining information which is also stored
in electronic form.
IRDAI Website
The IRDAI maintains an active website (URL: http://www.irda.gov.in ). The site is
updated regularly and all the information released by the IRDAI 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,
CorporateAgents
4. Information relating to Insurance Councils, Insurance Ombudsmen
5. Annual Report / IRDA Journal
6. Press Releases.
Complaints against Insurance Companies
IRDAI 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 poorquality of service rendered by any of its
offices/branches, please approachthe Nodal Officer of the Insurance Company
concerned. In case you are not satisfied with the Insurance Company’s responseyou
may also file a complaint with the Insurance Ombudsman in your State. The Insurance
Ombudsman is an independent office to provide speedyand costeffective resolution
of grievances to the customers. For more details on Insurance Ombudsman Scheme
and their contactnumbers, 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 responsefrom insurer(s) within a reasonable period of time or are dissatisfied with
the response of the company, they may approachthe Grievance Cell of the IRDAI.

d.) Cell for redressal of grievances of Policyholders
The Grievance Redressal Cell of the Insurance Regulatory and Development
Authority looks into complaints from policyholders. Complaints against Life and
Non-life insurers are handled separately. This Cell plays a facilitative role by taking
up complaints with the respective insurers.
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 responsefrom insurer(s) within a reasonable period of time or are dissatisfied with
the response of the company, they may approachthe Grievance Cell of the IRDA. The
complaints need to be addressed to the Non-life insurance Grievance Cell of the IRDA
and forwarded to the address given below.
Only cases of delay/non-response regarding matters relating to policies and claims are
taken up by the Cell with the insurers for speedydisposal. As claims/policy contracts
in dispute require adjudication and the IRDA does not carry out any adjudication,
insured’s are advised to approachthe available quasi-judicial or judicial channels, i.e.,
the Insurance Ombudsmen, Consumer forum or the Civil courts for such complaints.
The list of Insurance Ombudsmen along with their contactdetails are available on this
website under the heading ‘Ombudsmen’.
Only complaints from the insured are themselves or the claimants shall be entertained.
The Cell shall not entertain complaints written on behalf of policyholders by
advocates or agents or any third parties. Where complaints are being sent through e-
mail, complainants are requested to submit complete details of the complaint as
required in the complaints registration form.

Chapter 7
Changes in Insurance Policies by IRDA
Though the deadline to roll out new policies was 1st October, IRDA has
extended the date to 1st January’ 2014, except for the insurance products which offer
highest NAV, or are indexed linked. You may be curious to know the new guidelines
for the insurance policies. As per new guidelines issued by IRDA, all new insurance
products will be divided into three broad categories-
• Traditional
• Variable
• Unit-linked
Traditional Products:
The earlier versions of traditional insurance products, viz. participating and non-
participating would continue. Henceforth, all traditional products will have a higher
death cover. Regular paying premium policies will have a cover of 10 times the
annualised premium paid for people with an age of less than 45 years and 7 times for
others.Bonus for participating policies will be linked to the performance of the fund
and is not declared or guaranteed in advance. However, in case of non-participating
policies, the return in the policy is to be disclosed in the beginning.
Unit-linked Products:
Due to various charges in the insurance policy, the investment growth gets reduced.
Now the insurers have to inform policyholders about such reduction in the yield of
their products ona monthly basis. Further an annual certificate has to be issued,
mentioning the premiums paid and the charges, including the tax, deducted from the
fund value.

Variable Products:
All variable insurance plans will guarantee a minimum rate of return at the
beginning of the policy. Variable insurance products will be treated at par with Unit-
linked Products, including charge structure and the commission package as applicable
for Unit-linked Products. Agents of such policies will get commission of up to 10%
only.
Commission Structure:
As per new guidelines, commissions will be linked to the premium paying period for
all products and will be less for policies with shorter tenure. Single premium-non
pension products will earn commission of up to 2% of the premium paid. In case of
regular premium paying insurance policies, a policy with a premium paying term of
up to 5 years, will earn a commission of up to 15% in first year and 7.5% in second
and third year. Subsequent years will earn up to 5% of commission in such policies.
For premium paying term of more than 12 years, commission can be up to 35% (for
companies older than 10 years) and 40% (for companies not older than 10 years).
Lock-in period / Surrender:
For Unit-linked Products, the lock-in period will continue to be five consecutive years
from the date of commencement of the policy. In case of Unit-linked and Variable
insurance products, the maximum surrender charge will be Rs.6,000 in the first year,
tapering off to Rs.2,000 in the fourth year and becoming nil fifth year onwards
Further, except in the case of death or any other contingency covered under the policy
during this five year period, the proceeds ofdiscontinued policies cannot be paid to
the insured.Based on the premium paying term, all individual non-linked life
insurance and pension policies will have a minimum surrender value. The policy
shall acquire a guaranteed surrender value, if all the premiums have been paid for at

least three consecutive years for products with a premium paying term of 10 years or
more. Similarly, for products with a premium term of less than 10 years, if all
premiums have been paid for at least two consecutive years, the policy shall acquire a
guaranteed surrender value of any subsisting bonus.
Revival of policies:
To revive a discontinued policy, the insurer will collect all due and unpaid
premiums without charging any interest or fee. However, the insurer can levy policy
administration and premium allocation charges and any guarantee charge, if such a
guarantee is reinstated.For policies that have not completed two years of revival
period at the end of the lock-in, the insurer will have to take written consent from the
policyholder to revive the policy immediately or within the two-year period.
Health insurance:
Now, all health insurance products,except for customised products, would be
renewable for life-time. All new individual health insurance policies, except those
with tenure of less than a year, will have a free-look period and this will be applicable
at the inception of the policy. Also, cumulative bonus will not be allowed on benefit-
based policies with the exception of personal accident cover. Insurers now have
to settle claims within a period of 30 days from the receipt of all documents.Health
insurance providers will have to provide coverage to non-allopathic treatments also.
But to avail of the cover, the policyholder will have to get the treatment done in a
government hospital or in any institute recognised by the government or any
accredited institute by the Quality Council of India or the National Accredition Board
on Health. In caseof claim, no-claim bonus can be reduced proportionately,
but cannotbe made zero.

Chapter 8
Current Affairs of IRDA-
 IRDA okay with LIC investment in public sector banks- (March
20, 2016)
Insurance regulator IRDA is satisfied with the investments of LIC in public
sectorbanks. After a scrutiny of its investments in PSU banks, the regulator has given
a clean chit to the largest domestic institution with assets of close to Rs 18 lakh crore.
According to an official, the regulator did not find anything wrong with its investment
pattern in PSU banks. Earlier, the RBI had expressed concern over LIC making huge
investments in PSU banks, saying it can “affect the financial stability”.
VR Iyer, Member, IRDA, led the team which held discussions with LIC.
IRDA along with regulators, including the RBI and the Sebi, is conducting regulatory
scrutiny of large institutions which can posesystemic risk in the economy.
According to IRDA officials, in a total investment portfolio of around Rs 22,00,000
crore, LIC’s equity investment is just 6-7 per cent and investments in banks are still a
smaller portion. LIC has followed the due diligence while making investment in the
banks, they said.
LIC had made a profit of Rs 24,373 crore from the equity market in 2014-15
as against a profit of Rs 21,257 crore in the financial year 2014, which is a gain of
14.65 per cent..

 IRDA gives initial approvalto 4 global reinsurance majors-
(March 16, 2016)
Opening up the Indian reinsurance market to new players, the Insurance
Regulatory and Development Authority of India (IRDA) has given its initial approval,
known as R1 in regulatory parlance, to four global players — Munich Re, Hannover
from Germany, Swiss Re from Switzerland and French major SCOR.
Confirming the development, a senior IRDA official said that after providing
the R1 clearance, the regulator now is conducting the due diligence for granting the
final approvals (R2) to these global reinsurers to set up direct operations in the
country and the process may take some time. Munich Re is the largest reinsurance
player in the world while Swiss Re is the second largest and Hannover comes third in
global size.
 SEBI, IRDA to get service tax exemption for regulatory
services- (February 29, 2016)
Currently, the service tax for these services is 14 percent. In the Union
Budget for 2016-17 unveiled today, the government has provided service tax
exemption for various activities, including those related to the Securities and
Exchange Board of India (SEBI) and Insurance Regulatory and Development
Authority (IRDA).
The "regulatory services" provided by SEBI and IRDA as well as the services
offered by EPFO have been exempted from
service tax with effect from 1 April 2016.
There have been uncertainties on whether SEBI’s regulatory services can be
taxed, especially after the government moved to negative list for service tax few years

back. Among others, in the latest Budget, the service of life insurance business
provided by way of annuity under the National Pension System regulated by Pension
Fund Regulatory and Development Authority (PFRDA) has also been exempted from
the service tax ambit. At present, the service tax in this regard was 3.5 percent.
 IRDA’s new reinsurance guidelines favour public sector firm
GIC Re- (January 29, 2016)
The Insurance Regulatory and Development Authority (IRDA) has revised its
regulations for the reinsurers, giving preference to public sectorreinsurer GIC Re in
the domestic insurance sector.
“Every Indian insurer has to offer its reinsurance business to Indian reinsurer
and then to other reinsurers like foreign reinsures which are having branches in India,
Lloyd’s and reinsurers which are having branches in special economic zone of GIFT
in Ahmedabad,” IRDA said. In April last year, IRDA had originally released
guidelines giving preference to GIC Re, but it revised the norms later following
objections raised by foreign players. However, the government representative on the
IRDA board spokeagainst the revised guidelines, forcing the IRDA to revamp the
norms again.
The current rules grant parity to all three parties, saying that every Indian
insurer, in order of priority, should first offer an opportunity to the Indian reinsurer to
participate in its reinsurance business or a foreign reinsurer which maintains a 50 per
cent minimum retention or to other Indian insurers. The Insurance Laws
(Amendment) Act, 2015, permits foreign reinsurance companies and Lloyds to set up
branch office in India.
The IRDA had said “based on the advice received from the Government of
India” in a meeting on November 24, it proposed to amend the regulations to require

Indian insurers to first offer to the Indian reinsurer —GIC Re is the only Indian
reinsurer now with 52 per cent market share — the choice to participate in their
facultative and treaty surpluses before other players.
Further, IRDAI regulations clarify that a foreign reinsurer branch cannot cede
more than 50 per cent of its total reinsurance placements made outside India with its
parent company. Based on necessity, the Indian reinsurer should organise domestic
pools for reinsurance surpluses in consultation with all Indian insurers and foreign
reinsurer branches.
 Union Cabinet gives nod to 49% FDI in insurance sector- (July
25, 2015)
The Union Cabinet approved the proposalof increasing the Foreign Direct
Investment (FDI) limit in the insurance sectorto 49% from the existing 26%. The
move is in sync with the proposalmade by Finance Minister Arun Jaitley in his
maiden Budget speech to raise the FDI cap in insurance sectorfrom 26% to 49%.
However, the management control of insurance firms will be with the Indian
companies only. The step to enhanced FDI limit is expected to benefit private sector
insurance companies, which require a huge amount of capital.

SBI Life Insurance to appealagainst the order of IRDA to
refund Rs.275 crore
The Private sector life insurer, SBI Life Insurance would appeal against the order
of Insurance Regulatory and Development Authority (IRDA) to refund Rs.275
crore to the policy holders of Dhanaraksha Plus Limited Premium Paying Term
(LPPT), a group insurance policy. Why IRDA directed SBI Life Insurance to
refund Rs.275.29 crore to policy holders within six months? The insurance
regulator, IRDA charged SBI Life of violation of various norms by mis-selling the
policy and payment of higher commission to agents. The order was issued after an
enquiry that disclosed SBI Life Insurance was charging the second year premium
along with the first year premium
 IRDA spotted that 99.99 % of the total premium procured under the LPPT product
was sourced by corporateagents of the life insurer belonging to SBI Group. The
insurer has paid 40 % of first year premium as ‘first year commission’ and 7.5 %
of second year’s premium as ‘second year commission’.
 Though, the single premium version of productbeen offered to the policy holders,
the actual commission payable would have been only 2 %.
 Thus, it can be concluded that the large scale sale of LPPT as single premium
payment policy has only facilitated higher commission payments to insurance
intermediaries involved who are predominantly SBI and its associate banks.
 It relates to polices issued during FY9, FY10 and FY11.
 Thus, IRDA directed SBI Life Insurance to refund Rs.275.29 crore to policy
holders within six months, as the amount was collected from them in violation of
norms.
Note: SBI Life Insurance is a joint venture between country’s biggest lender, State
Bank of India (SBI) and BNP Paribas Cardif.

 Govt. allows FIIs, NRIs to invest in insurance sector (February
9, 2015)
The Union Government has allowed 26% foreign investment in insurance
sectorin activities related to insurance viz. broking, Third Party Administrators
(TPAs) and surveyors and permitted Foreign Institutional Investors (FIIs) and Non-
Resident Indians (NRIs) to also invest in insurers within the stipulated cap. The
Department of Industrial Policy and Promotion (DIPP) stated that in caseof insurance,
the 26% cap will include FDI and investments from FIIs and NRIs. (Earlier, only FDI
under the automatic route was allowed in insurance companies.)
 Apart from insurance companies, the relaxation would apply to insurance brokers,
third-party administrators (TPAs), surveyors and loss assessors. All of this
investment can be made under the automatic route.
 Insurance brokers are entities which for remuneration arrange insurance contracts
with insurers or reinsurers on behalf of their clients.
 The TPAs help in facilitating health insurance on behalf of insurers.
 Surveyors and loss assessorsprovide technical services to the insurance
companies.
 All these entities are required to obtain a licence from the Insurance Regulatory
and Development Authority (IRDA) for undertaking specific activities.
The Arvind Mayaram Committee on definition of FII and FDI, in its draft
report, recommended composite caps whereby FDI, FII and NRI investments would
form part of the total cap on foreign investments. Note: The Insurance Act, 1938 does
not stipulate any FDI limits for insurance intermediaries or TPAs, but sectorregulator
IRDA has restricted it to 26%.

 Justice B.N.Srikrishna Committee recommendations to be
reviewed by a 9-member IRDApanel(February 5, 2015)
The Insurance Regulatory and Development Authority (IRDA) set up a 9-
member panel to review the 14 non-legislative recommendations made by the
Financial Sector Legislative Reforms Commission (FSLRC). The role of panel is to:
o Examine the extant legislative and regulatory framework in compliance 14
Non-Legislative Recommendations (NLRs).
o Identify the gaps and possible improvements in the extant framework vis-a-vis
the 14 NLR.
o Suggest changes or modifications to the extant framework in compliance with
the 14 NLR.
‘Money Maxima’: Anew product by Tata AIA Life launched
(January 16, 2014)
Money Maxima is a long term plan that offers the dual benefits of both
guaranteed and non-guaranteed returns and, therefore, is good value for money. These
new offerings also provide additional benefits viz. guaranteed returns, liquidity and
flexibility of plan duration.

 Unique Identity Numbers to hospitals: IRDA (November 27,
2014)
With a view to aid in identifying hospitals and gathering information
regarding various charges imposed by them on different medical procedures, the
Insurance Regulatory and Development Authority (IRDA) has begun a process to
provide unique identity numbers to hospitals.
IRDA is working with national accreditation agencies to uniquely identify
hospitals, which will involve providing them identity numbers that will be linked with
the pin codeof the area and the name of hospitals.
It has come into the notice of IRDA that different hospitals are imposing
different charges on patients with medical cover. Lack of data in the medical
insurance segment has led to instances where hospitals have charged irrational
amounts from these patients. This is the main reason why IRDA wants to give identity
numbers to hospitals. It will enable the regulatory bodyto see the charges these
hospitals are charging from patients for different treatments. The transactional data
being collected from health insurers will enable it to compare the charges for a
particular disease or a procedureby one hospital versus another.
As per Insurance Information Bureau, which is under the administrative
control of the regulator and is collecting and compiling the data for assigning unique
identity numbers to hospitals, this step would help streamline prices apart from
curbing fraudulent billing.

 IRDA relaxes investment norms (August 14, 2014)
Insurance Regulatory and Development Authority (IRDA) has relaxed the
investment norms for the firms like Housing finance and infrastructure finance
companies to allow these companies to get higher funding from the insurance
companies.
Steps taken by IRDA:
Currently, such exposure to housing finance companies and infrastructure
finance companies is treated as exposure under financial and insurance activities but
the industry exposure limits will continue to apply for such investments.
The single investee debt exposure limits in housing finance companies have
been enhanced to 20% of equity plus free reserves from existing 10% limit. The limit
mentioned above can be further increased by an additional 5% with the prior approval
of board of company. The group and promoter group exposure norms will continue to
apply on the investments made in a housing finance company.
The group and promoter group exposure norms will continue to apply on the
investments made in a housing finance company.

Chapter 9
Conclusion
Here are the five things that could simplify life insurance further.
Show investment returns-
Guaranteed plans are here to stay. Their biggest advantage is that your
investment benefits are mentioned and guaranteed upfront. But a serious drawback is
that the investment benefits are difficult to understand. For instance, a guaranteed
insurance plan brochure guarantees an annual income of 8% of the sum assured
broken into monthly payments during the payout phase. But when you work out the
net return from the sample illustration in the brochure, it comes to around 4%. That’s
because the published 8% figure is only the rate of payout and not an indication of
investment return or net return.
Mandatory net return-
The benefit illustration with Ulips now comes with a calculation of net yield.
The illustration assumes two investment rates of return, 4% and 8%, to illustrate
investment benefits post-charges. IRDA has asked insurers to publish the net yield or
investment return net of charges as well. But this net yield does not give the actual
picture as the rules allow insurers to exclude costs suchas insurance charge, service
tax and any costrelated to offering an investment guarantee.
Return on surrender value-
Insurance products allow investors liquidity by surrendering their policies
midway. In Ulips, surrender charges have been trimmed. But for traditional plans, it
still bites. The current benefit illustration only discloses the surrender value, after
surrender costhas been applied, in rupee terms. What would help is internal rate of
return (IRR).

Label according to cover-
Mutual funds are now color coded to denote the level of risk. Insurers could
do the same for the amount of cover offered. “It’s important to understand the ‘life
insurance’ component. Today, for the same annual premium, the sum assured can
range from 10 times the annual premium to over 500 times. Labeling helps the
customer understand the amount of protection he is getting,” said
Most important document-
Finally, the most important disclosures could be put together on one page.
“Forcredit cards, you now get a single page titled ‘Mostimportant terms and
conditions’, which helps in understanding the key features even if one does not read
the entire agreement, which can be onerous. The same could be done in life insurance
products to help customers understand key benefits,” said Shah. “The one pager
should clearly communicate how much you pay, how long you pay, what is the policy
term, where is the money invested and what is the net return (in a guaranteed plan).
This document should also carry surrender charges in a simplified form” said Surya
Bhatia, a certified financial planner, and managing partner, Asset Managers, a
financial planning firm. This document could be put along with the benefit
illustration.

10.
WEBSITES-
https://en.wikipedia.org/wiki/Insurance_Regulatory_and_Development_Authority
http://www.cirl.co.in/
http://www.kinrep.com/
https://www.camsrepository.com/
http://www.irda.gov.in/
BOOKS-
 Managing Regulatory Body Competence (IAEA Publications)
 Power Supplies, Switching Regulators, Invertors and Converters (Irving M.
Gottlieb)
 Technical Analysis (Julier R.Dahquist)
 Regulatory Performance In India (S K Sarkat)
 The Indian Financial System (Veena Agarwal)
MAGAZINE-
 Forbes (Inside the road-20 India) [2012 Edition].
 India Today (July 2015).
 The Economist (August 2014).

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