This document provides information on insurance services in India. It discusses key topics such as: - What insurance is and the roles of insurers and insured parties - Requirements for companies to operate insurance businesses in India - Regulations from the Insurance Regulatory and Development Authority (IRDA) regarding registration and renewal for insurance companies - Guidelines on how insurance companies must invest their assets - Obligations for insurers to provide coverage in rural and social sectors It also outlines the roles and regulations for insurance agents, brokers, surveyors, loss assessors, and actuaries operating in the Indian insurance industry.

1. INSURANCE SERVICES

2. INSURANCE SERVICES
Insurance is a contract in which the insurer (insurance co.)
• agrees / undertakes,
• in considerations of a sum of money (premium),
• to make good the loss suffered by the insured
against a specified risk such as fire and any other similar
contingency or compensate the insured / beneficiaries on the
specified risk such as fire and other similar contingency or
compensate the insured / beneficiaries on the happening of a
specified event such as accident or death.

3. INSURANCE ACT ,1938
Any type of insurance business in India can be carried out
only by :
• A public company
• A cooperative society
• An insurance cooperative society ,
• Having paid up capital of Rs 1000 crores,
• In which no body corporate holds more than 26 % of its
paid up capital and
• Whose sole purpose is to carry on insurance business in
India.
• After the enactment of IRDA Act 1999 ,only Indian
insurance companies are permitted to carry on business.

4. An Indian Insurance Company
It is a company formed and registered under the Companies
Act in which the aggregate holding of equity shares by a foreign
company ,either by itself or through subsidiaries / nominees,
does not exceed 26% paid –up equity capital and whose sole
purpose is to carry on life / general / reinsurance business.

5. Registration [ Sec 3 , IRDA 1999 ]
Registration with IRDA is mandatory.
The application should be accompanied by the following:
• A certified copy of MOA and AOA
• Name , address and occupation of directors
• A statement of class (es) - of insurance business done / to be
done
• Statement of deposit with RBI on behalf of the government
.The deposit can be in cash / approved securities. The
deposits would be deemed to be part of the assets of the
insurer , but not be susceptible to any assignment /
charge.
If any part of the deposit is used in the discharge of any liability
of the insurer , the deficiency should be supplied within 2
months to make up the amount so used.If an insurer ceases
to carry on in India all classes of insurance business and all
his liabilities have been satisfied / provided for , the court may
order the return of the deposit.

6. • A declaration verified by an affidavit by the principal officer of
the insurer that the requirement of paid-up capital :
Rs 100 cr : for life / general and
Rs 200 cr : for reinsurance business
• A certified copy of
(i) published prospectus , if any
(ii) standard policy form of the insurer and
(iii) statement of assured rates, advantages, terms and
conditions to be offered in connection with insurance policies.
• The receipt showing payment of fee (as determined by IRDA
regulations) not exceeding Rs 50,000 for each class of
business
• Any other document as specified by IRDA

7. Renewal of Registration
• Certificate of registration should be renewed every year
• Application for which should be made to IRDA before Dec.31
of the preceding year
Cancellation of Registration
The IRDA will cancel registration of an insurer if he :
• fails to comply with the requirement of deposits with RBI
• fails to comply with the requirement relating to sufficiency
of assets
• has transferred his business to another person
• defaults in complying with directions as per IRDA /
Companies Act / FEMA / GIC Act / LIC Act
• carries on any other business

8. Investment of Assets
The assets of insurers should (under Sec.27 of the Insurance
Act) be invested in the following manner :
• 25 % in govt securities
• Not less than 25 % in govt / other approved securities
• The balance in approved investments as specified in Sec
27-A (1) :
**Securities of, or guaranteed by the Govt of UK
**Debentures or other securities issued with the
permission of central govt, state govt, Act of state
legislature
**Immovable property situated in India
**Preference share of any company which has paid
dividends on its ordinary shares for the 5 years
immediately preceding to the current year.
• The funds of the policy-holders are prohibited from being
directly / indirectly invested outside India.

9. Insurance Business in Rural / Social Sector
[ Sec. 32 – B ]
Every insurer would have to undertake such percentage
of life / general insurance business in the rural / social
sectors as may be specified by the IRDA in this behalf .

10. Rural Sector
• A place with population not more than 5,000
• Density of population not more than 400 per sq. km.
• More than 25% of male working population is engaged in
agricultural pursuits as :
• Cultivators
• Agricultural laborers
• Workers in live stock , forestry ,plantation , orchards etc

11. Life Insurer :
Of the total policies written in that year :
• I st fin.al year : 7 %
• 2 nd fin.al year : 9 %
• 3 rd fin.al year : 12 %
• 4 rth Fin.al year : 14 %
• 5 th Fin.al year : 16 %
General Insurer :
• First 2 years should be 2 % and 3 % respectively and
• Thereafter 3% of total gross premium income direct in that
year.

12. Social Sector
• Unorganized sector
• Informal sector ;
• Economically vulnerable sector / backward classes
• Other categories of workers
• Guardians who need insurance to protect persons with
disability
Bidi workers , carpenters , cobblers , artisans , physically
disabled self employed persons , washer men , person
running a repairs outlet , rickshaw puller , vegetable
vendors etc.
All insurers are obliged to insure 5,7,10,15, and 20
thousand lives in the first 5 fin.al years respectively.

13. Insurance Agents
An insurance agent is a licensed agent with the IRDA who
receives / agrees to receive payment by way of commission /
other remuneration in consideration of his soliciting / procuring
insurance business, including continuance, renewal or revival of
policies .
Code of Conduct
• Identify himself with an insurance company
• Disseminate the requisite information in respect of insurance
products offered for sale by his insurer and take into account
the needs of the prospects while recommending a specific
insurance plan
• Indicate the premium to be charged by the insurer for the
insurance product offered for sale
• Explain to the prospect the nature of information required in
the proposal form by the insurer and also the importance of
disclosure of material information

14. • Bring to the notice of the insurer any adverse habit or
income inconsistency of the prospect, in the form of a report
• Inform promptly the prospect about the acceptance or
rejection of the proposal by the insurer
• Obtain the required documents at the time of filing the
proposal form
• Render the necessary assistance to the policyholders or
claimants or beneficiaries in complying with the requirements
for the settlement of claims by the insurers
• Advise every individual policyholder to effect nomination

15. INSURANCE BROKERS
Direct Brokers
Carries out the functions specified below in the field of general /
life insurance :
• Obtain detailed information of the client's business and
risk mgt philosophy
• Rendering advice on appropriate insurance cover and
terms
• Detailed knowledge about the insurance market
• Submitting quotations to the client for consideration
• Acting promptly on instruction of clients
• Assisting client in paying premiums
• Providing services related to insurance consultancy and
risk management
• Assisting in the settling of claims
• Maintaining proper record of claims

16. Re- Insurance Brokers
Is one who arranges reinsurance for direct insurers with
insurance and reinsurance companies. His function includes
the following :
• Familiarizing himself with the client's business and risk
retention philosophy
• Maintaining record of the insurer's business to assist the
re-insurer
• Rendering advice based on technical data on the re-
insurance covers available in the international insurance
and re-insurance markets
• Maintaining data base of available reinsurance markets ,
including solvency rating of individual re-insurers

17. • Rendering consultancy and risk management services for
reinsurance
• Selecting and recommending a re-insurer or a group of re-
insurers
• Negotiating with a re-insurer on the client's behalf
• Assisting in finalizing the reinsurance contract ,payment of
premium and settlement of claims if any

18. Composite Brokers
An insurance broker who arranges insurance for the clients with
the insurance companies and / or reinsurance for his clients.
He performs the function of both the direct broker as well as
the re-insurance broker

19. Surveyors and Loss Assessors
• Claims of loss amounting to Rs 20,000 or more can be admitted
by an insurer payment or settled only after obtaining a report
from an approved surveyor / loss assessor holding a
license from IRDA.
• In case of a claim of less than Rs 20,000 in value on any policy
of insurance , an insurer can employ a surveyor / loss assessor
other than an approved one for surveying such loss on
payment of remuneration as thought fit.

20. DUTIES AND RESPONSIBILITIES
• Estimate , measure and determine the quantum and description
of the subject under loss nature of ownership and insurable
interest.
• Conduct spot and final survey , as and when necessary ,and
comment upon excess / under insurance and any other related
matter
• Examine , inquire , investigate , verify and check upon the
causes and the circumstances of the loss in question also the
extent of loss .
• Advise the insurer and the insured about the loss minimization ,
loss control , security and safety measures , wherever
appropriate , to avoid further losses

21. • Comment on the admissibility of the loss as also observance of
warranty conditions under the policy contract
• Assess the loss on behalf of the insurer
• Give reasons for denial of claim , incase the claim is not
covered by policy terms and conditions
• Comment on its disposal and salvage value
A surveyor / loss assessor should submit his report to the
insurer as expeditiously as possible , but not later than 30 days
of his appointment.

22. DUTIES AND OBLIGATIONS of an Actuary
In the interest of the insurance industry and the policy–holders ,
the duties and obligations of an appointed actuary of an insurer
include :
• Render advice regarding product design , pricing , insurance
contract wording , investments and re-insurance
• Ensure the solvency of the insurer at all times
• Comply with provisions of Insurance Act regarding maintenance
of required solvency margins
• Comply with provisions of Insurance Act regarding certification
of the assets and liabilities
• Draw attention of the management towards important issues to
avoid (i) any contravention of the Insurance Act (ii) prejudice to
the interests of the policyholders
• Comply with IRDA directions from time to time

23. • Ensure that all requisite records have been made
available to him/ her for the purpose of conducting
actuarial valuation of assets and liabilities
• Ensure that the premium rates of the insurance
products are fair
• To certify that necessary reserves have been
determined as per the norms of Actuarial society of
India and IRDA
• Ensure that the policyholders` reasonable
expectations have been considered in the matter of
valuation of liabilities and distribution of surplus to the
participating policyholders , who are entitled to a share
of the surplus

24. INVESTMENT COMMITTEE
Every insurer should constitute an investment committee
consisting of a minimum of 2 non-executive directors of the
insurer , chief of finance and investment divisions and the
appointed actuary.
The decision taken by the investment committee should be
properly recorded and be open to the inspection by IRDA.

25. Every insurer should draw up annually an investment policy ,
their major considerations being :
• Issues relating to liquidity , prudential norms , exposure limits ,
stop loss limits in securities trading , management of all
investment and market risks / asset liability mismatch ,
investment audit / statistics and so on and provision of
Insurance act and IRDA regulation
• Ensuring an adequate return on policy-holders/shareholders
funds consistent with the protection , safety and liquidity of such
funds
• The funds of the insurer should be invested in shares and
instruments which enjoy investment grade rating.

26. • Thank you