Insurance Regulatory and Development Authority
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The Insurance Regulatory and Development Authority (IRDA)[1] is a national agency of the Government of India, based in Hyderabad. It was formed by an act of Indian Parliament known as IRDA Act 1999, which was amended in 2002 to incorporate some emerging requirements. Mission of IRDA as stated in the act is "to protect the interests of the policyholders, to regulate, promote and ensure orderly growth of the insurance industry and for matters connected therewith or incidental thereto."
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[edit] Expectations
The law of India has following expectations from IRDA
1. To protect the interest of and secure fair treatment to policyholders;
2. To bring about speedy and orderly growth of the insurance industry (including annuity and superannuation payments), for the benefit of the common man, and to provide long term funds for accelerating growth of the economy;
3. To set, promote, monitor and enforce high standards of integrity, financial soundness, fair dealing and competence of those it regulates;
4. To ensure that insurance customers receive precise, clear and correct information about products and services and make them aware of their responsibilities and duties in this regard;
5. To ensure speedy settlement of genuine claims, to prevent insurance frauds and other malpractices and put in place effective grievance redressal machinery;
6. To promote fairness, transparency and orderly conduct in financial markets dealing with insurance and build a reliable management information system to enforce high standards of financial soundness amongst market players;
7. To take action where such standards are inadequate or ineffectively enforced;
8. To bring about optimum amount of self-regulation in day to day working of the industry consistent with the requirements of prudential regulation.
[edit] Duties,Powers and Functions of IRDA
Section 14 of IRDA Act, 1999 laysdown the duties,powers and functions of IRDA
(1) Subject to the provisions of this Act and any other law for the time being in force, the Authority shall have the duty to regulate, promote and ensure orderly growth of the insurance business and re-insurance business.
(2) Without prejudice to the generality of the provisions contained in sub-section (1), the powers and functions of the Authority shall include,
(a) issue to the applicant a certificate of registration, renew, modify, withdraw, suspend or cancel such registration;
(b) protection of the interests of the policy holders in matters concerning assigning of policy, nomination by policy holders, insurable interest, settlement of insurance claim, surrender value of policy and other terms and conditions of contracts of insurance;
(c) specifying requisite qualifications, code of conduct and practical training for intermediary or insurance intermediaries and agents;
(d) specifying the code of conduct for surveyors and loss assessors;
(e) promoting efficiency in the conduct of insurance business;
(f) promoting and regulating professional organisations connected with the insurance and re-insurance business;
(g) levying fees and other charges for carrying out the purposes of this Act;
(h) calling for information from, undertaking inspection of, conducting enquiries and investigations including audit of the insurers, intermediaries, insurance intermediaries and other organisations connected with the insurance business;
(i) control and regulation of the rates, advantages, terms and conditions that may be offered by insurers in respect of general insurance business not so controlled and regulated by the Tariff Advisory Committee under section 64U of the Insurance Act, 1938 (4 of 1938);
(j) specifying the form and manner in which books of account shall be maintained and statement of accounts shall be rendered by insurers and other insurance intermediaries;
(k) regulating investment of funds by insurance companies;
(l) regulating maintenance of margin of solvency;
(m) adjudication of disputes between insurers and intermediaries or insurance intermediaries;
(n) supervising the functioning of the Tariff Advisory Committee;
(o) specifying the percentage of premium income of the insurer to finance schemes for promoting and regulating professional organisations referred to in clause (f);
(p) specifying the percentage of life insurance business and general insurance business to be undertaken by the insurer in the rural or social sector; and
(q) exercising such other powers as may be prescribed
[edit] Advisory Committee
IRDA has a Chairman and some permanent and some part time members but the regulations are enacted under the guidance of a statutory advisory committee. The advisory committee consists of following individuals and ex-officio authorities:
Mr Hari narayana is the third Chairman of IRDA.
Mr C S Rao was the second Chairman of IRDA after Mr N Rangachari as the first Chairman. Mr K K srinivasan is the Nonlife Member of IRDA. There is provision for a panel of other members and part time members. IRDA formed a high powered Insurance Law Reforms Committee known as KPN Committee with important insurance advisors like Mr N Govardhan and Dr K C Mishra as its members. There were also a few non-advisory committee members like Mr Liaquat Khan and Mr T Viswanathan etc. Full force and utility of various institutions like Advisory Committee and self-regulatory organizations are not yet realized as the regulator seems to be in a long learning mode. Due to over delegations, Individual incumbents decide the pace and extent of utilization of prudential and statutory bodies. Research is limited to opinion seeking through legacy channels. Market waits for revision of insurance act and establishment meaningfully functioning regulatory organs devoid of excess delegation and subjective localization of development agencies.
IRDA Journal is available as soft copy in its website. Unlike other Indian administrative Regulatory Agencies IRDA is perceived as a silent regulator with activities confined to its local existence.
[edit] New IRDA Chairman
Government of India has circulated to broadbase IRDA chairman selection process. It is felt in the market that placing of retired civil servants as IRDA Chairman has served the purpose of administrative fiefdom of the regulator. Mostly, the regulator has become passive to market realities and most of the original public policy intentions have been systematically replaced by personal preferences. There seems to be no oversight of public policy erosions. Taking advantage of the completion of term of current incumbent, there seem to be an attempt to correct the future course but people do not perceive any outcome to result as the market does not seem to throw up candidates of the stature of Haward Davies for Indian market. But a right leadership is the solution to the requirement of this booming market.
[edit] Insurance Business
Insurance business is divided into four classes :
1) Life Insurance 2) Fire Insurance 3) Marine Insurance and 4) Miscellaneous Insurance.
Life Insurers transact life insurance business; General Insurers transact the rest.
No composites are permitted as per law.
- LEGISLATION:
Insurance is a federal subject in India. The primary legislation that deals with insurance business in India is:
Insurance Act, 1938, and Insurance Regulatory & Development Authority Act, 1999.
- INSURANCE PRODUCTS (for latest information get in touch with the current insurers – website information of insurers is provided at the web page for insurers ):
Life Insurance:
Popular Products: Endowment Assurance (Participating), and Money Back (Participating). More than 80% of the life insurance business is from these products.
General Insurance:
Fire and Miscellaneous insurance businesses are predominant. Motor Vehicle insurance is compulsory.
Tariff Advisory Committee (TAC) lays down tariff rates for some of the general insurance products (please visit website of GIC for details )
- CUSTOMER PROTECTION:
Insurance Industry has Ombudsmen in 12 cities. Each Ombudsman is 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 can be obtained from the offices of LIC and other insurers.
[edit] Indian Insurance Industry
INSURERS
Insurance industry, as on 1.4.2000, comprised mainly two players: the state insurers:
Life Insurers:
- Life Insurance Corporation of India (LIC)
General Insurers:
- General Insurance Corporation of India (GIC) (with effect from Dec'2000, a National Reinsurer)
GIC had four subsidiary companies, namely ( with effect from Dec'2000, these subsidiaries have been de-linked from the parent company and made as independent insurance companies.
- The Oriental Insurance Company Limited
- The New India Assurance Company Limited
- National Insurance Company Limited
- United India Insurance Company Limited.
OTHER LIFE INSURERS
Name of the Company
- HDFC Standard Life Insurance Company Ltd.
- Max New York Life Insurance Co. Ltd.
- ICICI Prudential Life Insurance Company Ltd.
- Kotak Mahindra Old Mutual Life Insurance Limited
- Birla Sun Life Insurance Company Ltd.
- Tata AIG Life Insurance Company Ltd.
- SBI Life Insurance Company Limited .
- ING Vysya Life Insurance Company Private Limited
- Bajaj Allianz Life Insurance Company Limited
- Metlife India Insurance Company Ltd.
- Future Generali India Life Insurance Company Limited
- IDBI Fortis Life Insurance Company Ltd.
- Reliance Life Insurance Company Limited.
- Aviva Life Insurance Co. India Pvt. Ltd.
- Sahara India Insurance Company Ltd.
- Shriram Life Insurance Company Ltd.
- Bharti AXA Life Insurance Company Ltd.
- Future Generali India Life Insurance Company Limited
- IDBI Fortis Life Insurance Company Ltd.
- Canara HSBC Oriental Bank of Commerce Life Insurance Company Ltd.
- Aegon Religare Life Insurance Company Ltd.
- DLF Pramerica Life Insurance Company Ltd.
- Star Union Dai-ichi Life Insurance Co. Ltd.,
OTHER GENERAL INSURERS
Name of the Company
- Royal Sundaram Alliance Insurance Company Limited
- Reliance General Insurance Company Limited.
- IFFCO Tokio General Insurance Co. Ltd
- TATA AIG General Insurance Company Ltd.
- Bajaj Allianz General Insurance Company Limited
- ICICI Lombard General Insurance Company Limited.
- Apollo DKV Insurance Company Limited
- Future Generali India Insurance Company Limited
- Universal Sompo General Insurance Company Ltd.
- Cholamandalam General Insurance Company Ltd.
- Export Credit Guarantee Corporation Ltd.
- HDFC-Chubb General Insurance Co. Ltd.
- Bharti Axa General Insurance Company Ltd.
- Raheja QBE General Insurance Co. Ltd
- Shriram General Insurance Co. Ltd.
[edit] References
IRDA Website[2]
