IRDA Mission
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.
IRDA and compliance Insurance is a highly regulated industry:
COMPANY FINANCIALS: Every insurer to maintain the required reserves and solvency
margins. All the investments of premiums based on the set norms Mandate of insurance committee Books of accounts maintained as per norms. Quarterly reporting to IRDA. Premium income and number of policies are filed regularly.
ACTUARY & MARKETING: Product designed internally by company Filed for approval. Launched post approval, incorporating the changes recommended if
any (File and Use) All promotional materials are duly approved
IRDA and compliance OPERATIONS
Enclosing proposal form and PQIS with the policy. Policy process flow has IRDA recommendations e.g.: 15 day free look
period. Random sampling to check for mis selling and risk control TAT in customer grievances
TALISMA is the tool used. CRO (Tanya Basu) designated role
SALES Only licensed representative are authorized to sell. Returns at two scenarios for all companies – 6% & 10% Signature of sales rep in PQIS.
TRAINING Ensuring that all the authorized person selling are IRDA certified Training to be done in IRDA certified institute
IRDA and complianceSummarizing:
IRDA is one the strongest regulator across industries It’s the biggest assurance for a customer Workings are reasonably transparent as compared
with other industries. Rigid controls and a dynamic body Website: www.irdaindia.org
Check on Financial Strength of Life Insurers
Valuation of Assets and Liabilities The company has to have two separate Funds –
Policyholders Fund and the Shareholders Fund No money can be transferred from Policyholders Fund
to the Shareholders Fund except 7.5 % of surplus arisen in the relevant year
Compulsory valuation of Assets and Liabilities of the company on every 31st March
Valuation is certified by the Appointed Actuary who has Statutory Responsibility to IRDA
Every time the value of Assets in the Policyholders Fund have to be greater than the value of all liabilities relating to Insurance policies
Value of assets is taken as its easily realizable value (not the market or book value)
Check on Financial Strength of Life Insurers
Solvency MarginCompany has to have a minimum level of
Solvency Margin through additional assets The additional requirement of Solvency Margin is
as under: Traditional Products: 6% of Policy Value plus 0.45% of sum
at risk Unit Linked Policies: 1.5% of Policy Value plus 0.45 % of sum
at risk With Profit Unit Linked: 3% of Policy Value plus 3% of sum at
risk
The Solvency Margin is also checked by the IRDA on every 31st March
Insurance Ombudsman Created by Govt. of India on 11 Nov. 1998 Powers under sub section (1) of section 114 of Insurance Act Appointment under Section 40 C of the Insurance Act Purpose of resolving customer grievances Cases referred only when the insurer has not responded within
one month For cases less than 20 lacs SA. Performs two types of functions:
Conciliation Awarding
There are 12 Ombudsman in India List appended in your hand-book
This section states “65% compulsorily to be put in Govt. Securities & the balance
35% in specified stocks.”
“Investment Of Assets”
Section 27 Of Insurance Act
This section states “No Insurer shall directly or indirectly invest outside India
the funds of the policy holders.”
“Prohibition for investments of funds outside India.”
Section 27 C Of Insurance Act
This section states “No insurer shall grant loans or temporary
advances either on hypothecation of property or on personal security or otherwise, except
loans on life policies issued by him within the surrender value, to any director, manager,
managing agent, actuary, etc.”
“Prohibition of Loans”
Section 29 Of Insurance Act
“Power to restrict payment of excessive remuneration”
This section states “Remuneration whether by way of salary or
commission cannot be disproportionate, according to normal standards prevailing in
the insurance industry.”
Section 31 B Of Insurance Act
“Power of authority to remove managerial person from office”
This section states “If affairs being conducted in detrimental to
the interests of policy holders then can remove from office, with effect from such date as may be specified in the order, any director or chief executive officer, by whatever name
called, of the insurer.”
Section 34 B Of Insurance Act
“Power of authority to appoint additional directors”
This section states “If the authority is of opinion that in the
public interest or in the interest of insurer, or his policy holders it is necessary to do so, he
may from time to time, by order in writing appoint one or more persons as additional
directors.”
Section 34 C Of Insurance Act
“Limitation of expenses of management in life insurance business”
This section states “No insurer shall, in respect of life insurance business transacted by him in India, spend as
expenses of management in any calendar year an amount in excess of the prescribed
limits.”
Section 40 B Of Insurance Act
“Power of Central Government to acquire undertaking of insurers in certain cases”
This section states “In the interests of the policy holders or
share holders of such insurer, it is necessary to acquire the undertaking of such insurer the Central Government may, by notified order,
acquire the undertaking of such insurer.”
Section 52H Of Insurance Act
“Voluntary Winding Up”
This section states “Notwithstanding anything contained in the Indian Companies Act, 1913 (7 of 1913) an insurance company shall not be wound up
voluntarily except for the purpose of affecting an amalgamation or a re-construction of the
company.”
Section 54 Of Insurance Act
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