Insurance Regulatory and Development Authority

A Project submitted to

University of Mumbai for partial completion of the degree of

B.B.I. (Bachelor of Banking and insurance)

Under the Faculty of Commerce

By

KOMALKUNWAR CHHATARSINGH TANWAR

Roll No. 87

Under the Guidance of

PROF. DIPTI PATIL

Vidyavardhini’s

Annasahcb Vartak College of Arts,

Kedarnath Malhotra College of Commerce.

E.S. Andrade’s College of Science,

Vasai Road (West), Dist. Palghar, Maharashtra - 401202

March 2020
 Vidyavardhini’s
Annasaheb Vartak College of Arts,
Kedarnath Malhotra College of Commerce,
E.S. Andrade’s College of Science,
Vasai Road (West), Dist. Palghar, Maharashtra-401202

Certificate

This is certify that Ms.KOMALKUNWAR CHHATARSINGH TANWAR has worked

and duly completed her Project Work for the degree of B.B.I (Bachelor of Banking and
Insurance) under the Faculty of Commerce in the subject of Project Work and her project
is entitled, ‘The World Bank 'under my supervision.

I further certify that the entire work has been done by the learner under my guidance and
that no part of it has been submitted previously for any Degree or Diploma of any
University.

It is her own work and fuels reported by her personal findings and investigations.

PROF. DIPTI PATIL

Internal Examiner

Date of Submission External Examiner

 ACKNOWLEDGEMENT

To list who all have helped me is difficult because they are so numerous and the
depth is so enormous.
I would like to acknowledge the following as being idealistic channels and fresh
dimensions in the completion of this project.

I take this opportunity to thank the University of Mumbai for giving me chance to do
this project.

I would like to thank my Principal, DR. KESHAV N. GHORUDE for providing the
necessary facilities required for the completion of this project.

I take this opportunity to thank our Self-Finance in charge DR. ARVIND UBALE. And
our Coordinator PROF. DIPTI PATIL for their support and guidance.

I would also like to express my sincere gratitude towards my project guide. PROF.
DIPTI PATIL whose guidance and care made the project successful.

I would like to thank my College Library, for having provided various reference books
and magazines related to my project.

Lastly, I would like to thank each and every person who directly or indirectly helped me
in the completion of the project especially my Parents and Peers who supported me
throughout my project
 DECLARATION
I, the undersigned Ms. Komalkunwar Chhatarsingh Tanwar here by,
declare that the work embodied in this project work titled ‘The World
Bank' forms my own contribution to the research work carried out under
the guidance of PROF. DIPTI PATIL is a result of my own research
work and has not been previously submitted to any other University for
any other Degree / Diploma to this or any other University.

Wherever reference has been made to previous works of others, it has

been clearly indicated as such and included in the bibliography.

I, here by further declare that all information of this document has been
obtained and presented in accordance with academic rules and ethical
conduct.

-KOMALKUNWAR CHHATARSINGH TANWAR

ROLL NO. 87

Certified By

Prof. Dipti Patil

 RESEARCH METHODOLOGY

For the purpose of project data is very much required which works as a food for
process which will ultimately give output in the form of information. So before
mentioning the source of data for the project would like to mention that what type of
data have collected for the purpose of project and what it is exactly.

A research method is a systematic plan for conducting research. Methodology is the

systematic, theoretical analysis of the method applied to a field of study. It comprises
the theoretical analysis of the body of method and principles associated with a branch
of knowledge. Typically, it encompasses concepts such as paradigm, theoretical
model, phase and quantitative or qualitative techniques.

Now, this is the descriptive research paper based on secondary data. Data have been
collected through books, various websites, newspapers and publication of recent
research papers available in different websites, research articles, journals, E-journals
and etc.
 OBJECTIVES OF STUDY

 To understand the procedure of granting of license to companies to start insurance

business.
 To Study how the appointment of different insurance intermediary.
 To understand investigation of Insurance Premium.
 To understand the procedure of getting the licence of insurance from IRDA.
 To understand the procedure of get approval of Insurance product form IRDA.
 To understand the procedure to appoint an insurance inter-mediary.
 To accelerate the growth of the economy.
 To develop entrepreneurial skills.
 EXECUTIVE SUMMARY

IRDA was constituted by the Insurance Regulatory and Development Authority Act
1999 an act of parliament passed by the government of India. The goals of IRDA
includes promoting competition to enhance customer satisfaction through better
choice and lower premiums, while ensuring the financial security of the insurance
marked. Adjudicating dispute between insurers and intermediaries or insurance
intermediaries. It Promote speedy and orderly growth of the insurance industry for the
benefit of the common man, and to provide long term funds for accelerating economic
growth. All Insurers are increasingly using outsourcing, as a means of both reducing
cost and accessing specialist expertise, not available internally and achieving strategic
aims.

An insurer or its agent or other intermediary shall provide all material information
in respect of a proposed cover that would be in his or her interest. An insured or the
claimant shall give notice to the insurer of any loss arising under contract of insurance
at the earliest or within such extended time as may be allowed by the insurer. Low
Levels of Awareness is one of the reasons for subdued penetration of insurance in
India. Insurance is an intangible product and actual benefit will only be at the
happening of insured contingency by an Act of Parliament of India called the
Insurance Regulation and Development Authority Act, 1999. IRDA is the watchdog
and controller of the insurance industry in India and it works to bring better regulation
for the welfare of policyholders.
 TABLE OF CONTENT

CHAPTER PARTICULARS PAGE

NO. NO.
1 Introduction to IRDA
1.1 What is IRDA
1.2 Background of IRDA
1.3 Birth of IRDAI
1.4 IRDAI’s Activities
1.5 Objectives of IRDA
1.6 Organisation setup of IRDA
1.7 Mission Statement of the Authority
2 History of Insurance in India
3 Powers and Functions of IRDA
3.1 Duties, power and function, roles of IRDA
3.2 Role of IRDA
4 Chairman of IRDA
4.1 Mr.K.Ganesh
4.2 Mrs. T.L.Alamelu
4.3Mr.Pravin Kutumbe
5 Insurers
5.1 life
6 The Insurance Advisory Committee (meeting)
Regulation,2000
6.1 Short title, extent and commencement
6.2 Definitions
6.3 Procedure for meeting of the advisory committee
6.4 Quorum
6.5 Minutes of the meeting
6.6 Miscellaneous provisions
6.7 Principles of Insurance
7 Insurance Regulation and Development Authority
act,1999
7.1 Short title, extent and commencement
7.2 Definitions
7.3 Establishment and incorporation of authority
7.4 Composition of authority
7.5 Tenure of office
7.6 Removal from office
7.7 Salary and allowance
7.8 Bar on future employment of members
7.9 Administrative powers of chairperson
7.10 Meetings of Authority
8 Impact of New IRDA Regulations
8.1 Meaning
 8.2 Some impacts of IRDA
8.3 Effect of IRDA
9 Ombudsman
9.1 Meaning
9.2 Term or office
9.3 Removal from office
9.4 Pay and allowance of Ombudsman
9.5 Territorial Jurisdiction of Ombudsman
9.6 Power of Ombudsman
9.7 Insurance Ombudsman
9.8 Duties and Function of Insurance Ombudsman
9.9 Manner in which complaint to be made
9.10 Advisory Committee
10 Vigilance of IRDA
10.1 Procedures for lodging the complaints
10.2 Code of Conduct
10.3 Evaluation of IRDA
10.4 Department of IRDA
10.5 IRDA Health Regulation 2016
 Suggestion
 Conclusion
 Bibliography
Insurance Regulatory and Development Authority
CHAPTER 1: INTRODUCTION TO IRDA

1.1What is IRDA?

The Insurance Regulatory and Development Authority is an

autonomous, statutory body tasked with regulating and promoting the insurance
and re-insurance industries in India.

IRDA - Insurance Regulatory Development and Authority is the statutory,

independent and apex body that governs and supervise the Insurance Industry in
India.

It was constituted by the Insurance Regulatory and Development Authority Act,

1999, an Act of Parliament passed by the Government of India. The agency's
headquarters are in Hyderabad, Telangana, where it moved from Delhi in 2001.

It was constituted by Parliament of India Act called Insurance Regulatory and

Development Authority of India (IRDA of India) after the formal declaration of
Insurance Laws (Amendment) Ordinance 2014, by the President of India Pranab
Mukherjee on December 26, 2014.

IRDAI is a 10-member body including the chairman, five full-time and four part-time
members appointed by the government of India.

IRDA is the regulatory body in India that governs both Life insurance and General
insurance companies. India is a vast country that offers great opportunities to varied
segments one of which is the insurance sector.

Let us understand the concept of insurance regulator in a simple way. India witnesses
the concept of a joint family where the head, most commonly the grandparents, acts as
the guardian of each member.

The head takes care of everyone’s needs and maintains a balance for fair practices to
keep the family united. He treats everyone equal and helps the family in crisis guiding
them on how to steer out of it.
Now, similar to how the head of the family plays, IRDA runs the Indian insurance
industry as per its set rules and guidelines.

Insurance in India dates back to the year 1850 with the first General Insurance
Company established in Calcutta. Soon, with the passage of years the market became
competitive as many insurers started emerging both in life and non-life sectors.

Each company practised business on its rates and rules. It made customers’ insecure
which brought the credibility of the insurance market at stake.

As early as the government realized this fact, they thought of securing the customer’s
interest first and hence established an independent regulatory body called IRDA.

Over time, new demands rolled and the market got flooded with several insurance
products. Like a responsible head of the family would act to prevent the family from
any damage, IRDA monitors the development of the insurance industry and other
related activities.

The insurance industry of India is a huge market with several major players. So it becomes
important that there is an authority overseeing the industry. And this is where the
Insurance Regulatory and Development Authority of India (IRDAI) comes in. Let us learn
more about them.

The main function of the IRDAI is to regulate the insurance industry of the country. For
many years the insurance sector of India was protected.

The IRDA Act of 1999 allowed the entry of private companies in the insurance sector. It
also allowed for 26% investment by foreign companies. Since 2014 the FDI limit has
been increased to 49% and further opened up the insurance sector.

So the Insurance Regulatory and Development Authority of India has a role to protect
the policyholders from any form of discriminatory practices. They regulate all the
insurance companies.
All companies have to approach the IRDAI for registration certificates. And they are
responsible for the renewal, modification or cancellation of these certificates.

We regulate the Indian insurance industry to protect the interests of the policyholders
and work for the orderly growth of the industry.

1.2 Background of IRDA

 1991: Government of India begins the economic reforms programme and

financial sector reforms

 1993: Committee on Reforms in the Insurance Sector, headed by Mr. R. N.

Malhotra, (Retired Governor, Reserve Bank of India) set up to recommend
reforms.

 1994: The Malhotra Committee recommends certain reforms having studied

the sector and hearing out the stakeholders

 Some recommended reforms

o Private sector companies should be allowed to promote insurance

companies

o Foreign promoters should also be allowed

o Government to vest its regulatory powers on an independent regulatory

body answerable to Parliament

1.3 Birth of IRDAI

 Insurance Regulatory and Development Authority (IRDA) set up as

autonomous body under the IRDA Act, 1999

 IRDAI’s Mission: To protect the interests of policyholders, to regulate,

promote and ensure orderly growth of the insurance industry and for matters
connected therewith or incidental thereto.
1.4 IRDAI’s Activities

 Frames regulations for insurance industry in terms of Section 114A of the

Insurance Act 1938

 From the year 2000 has registered new insurance companies in accordance
with regulations

 Monitors insurance sector activities for healthy development of the industry

and protection of policyholders’ interests

1.5 Objectives of IRDA:

 To promote the interest and rights of policy holders.

 To promote and ensure the growth of Insurance Industry.

 To ensure speedy settlement of genuine claims and to prevent frauds and

malpractices

 To bring transparency and orderly conduct of in financial markets dealing with

insurance.

1.6 Organisational Setup of IRDA:

IRDA is a ten member body consists of:

 One Chairman (For 5 Years & Maximum Age - 60 years )

 Five whole-time Members (For 5 Years and Maximum Age- 62 years)

 Four part-time Members (Not more than 5 years)

The chairman and members of IRDAI are appointed by Government of India.

The present Chairman of IRDAI is Subhash Chandra Khuntia.

1.7 MISSION STATEMENT OF THE AUTHORITY:

Ø To protect the interest of and secure fair treatment to policyholders;

Ø 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;

Ø To set, promote, monitor and enforce high standards of integrity, financial

soundness, fair dealing and competence of those it regulates;

Ø To ensure speedy settlement of genuine claims, to prevent insurance frauds and

other malpractices and put in place effective grievance redressal machinery;

Ø 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;

Ø To take action where such standards are inadequate or ineffectively enforced;

Ø To bring about optimum amount of self-regulation in day-to-day working of the

industry consistent with the requirements of prudential regulation.
Chapter 2: HISTROY OF INSURANCE IN INDIA

In India, insurance has a deep-rooted history. It finds mention in the writings of Manu
(Manusmrithi), Yagnavalikya (Dharmasastra) and Kautilya (Arthasastra). The
writings talk in terms of pooling of resources that could be re-distribution 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.

The life-insurance business began in 1818 saw the advent of life insurance business in
the India with the establishment of the Oriental Life Insurance Company in Calcutta;
the company failed in 1834.

In 1829, Madras Equitable began conducting life-insurance business in the Madras

Presidency.

The British Insurance Act was enacted in 1870, and Bombay Mutual (1871), Oriental
(1874) and Empire of India (1897) were founded in the Bombay Presidency. The era
was dominated by British companies.

In 1914, the government of India began publishing insurance-company returns. The

Indian Life Assurance Companies Act, 1912 was the first statute regulating life
insurance. In 1928 the Indian Insurance Companies Act was enacted to enable the
government to collect statistical information about life- and non-life-insurance
business conducted in India by Indian and foreign insurers, including provident
insurance societies. In 1938 the legislation was consolidated and amended by the
Insurance Act, 1938, with comprehensive provisions to control the activities of
insurers.

The Insurance Amendment Act of 1950 abolished principal agencies, but the level of
competition was high and there were allegations of unfair trade practices. The
Government of India decided to nationalise the insurance business.
An ordinance was issued on 19 January 1956, nationalising the life-insurance sector,
and the Life Insurance Corporation was established that year. The LIC absorbed 154
Indian and 16 non-Indian insurers and 75 provident societies. The LIC had a
monopoly until the late 1990s, when the insurance industry was reopened to the
private sector.

General insurance in India began during the Industrial Revolution in the West and the
growth of sea-faring commerce during the 17th century. It arrived as a legacy of
British occupation, with its roots in the 1850 establishment of the Triton Insurance
Company in Calcutta. In 1907 the Indian Mercantile Insurance was established, the
first company to underwrite all classes of general insurance. In 1957 the General
Insurance Council (a wing of the Insurance Association of India) was formed, framing
a code of conduct for fairness and sound business practice.

Eleven years later, the Insurance Act was amended to regulate investments and set
minimum solvency margins and the Tariff Advisory Committee was established. In
1972, with the passage of the General Insurance Business (Nationalisation) Act, the
insurance industry was nationalized on 1 January following the recommendations of
the Malhotra Committee, in 1999 the Insurance Regulatory and Development
Authority (IRDA) was constituted to regulate and develop the insurance industry and
was incorporated in April 2000. Objectives of the IRDA include promoting
competition to enhance customer satisfaction with increased consumer choice and
lower premiums while ensuring the financial security of the insurance market.

The IRDA opened up the market in August 2000 with an invitation for registration
applications; foreign companies were allowed ownership up to 26 percent. The
authority, with the power to frame regulations under Section 114A of the Insurance
Act, 1938, has framed regulations ranging from company registrations to the
protection of policyholder interests since 2000.
Chapter 3: Powers and Functions of IRDA

3.1 Duties, powers and functions, Roles of IRDA

Section 14 of IRDAI Act, 1999 lays down the duties, powers and functions 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.

1. Without prejudice to the generality of the provisions contained in sub-section

(1), the powers and functions 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 organisations 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 organisations 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 organisations 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.

3.2 ROLE OF 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, faith 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.
Chapter 4: Chairman of IRDA

Dr. Subhash C. Khuntia assumed office of Chairman, Insurance Regulatory and

Development Authority of India in May 2018.

He has had a career in Civil service spanning over 36 years. He has been Chief
Secretary, Government of Karnataka and before that he worked as Secretary (School
Education and Literacy), and Government of India in Ministry of Human Resource
Development.

He was appointed to the Indian Administrative Service (IAS) in 1981 and belongs to
Karnataka Cadre. In Government of Karnataka, he has served in various capacities in
Departments of Finance, Revenue, Personnel, Urban Development, Rural
Development and Public Works and Ports. In Government of India, he has served in
Ministry of Finance, Ministry of Human Resource Development and Ministry of
Petroleum & Natural Gas. He also served as Government nominee Director on the
Boards of Indian Oil Corporation, ONGC and Hindustan Petroleum Corporation.

4.1 Mr.K.Ganesh (LIFE MEMBER)

Mr. K. Ganesh assumed Charge as Member (Life) in Insurance Regulatory and

Development Authority of India on 31st July, 2019.
Prior to joining IRDAI, he was Executive Director (Corporate Communications) in
LIC of India. Mr. K. Ganesh joined LIC in 1983 and has worked in various parts of
the country.

He was Senior Divisional Manager of LIC of India at Indore and Chennai DO-II;
Regional Manager (Marketing) and Zonal Manager at Hyderabad. He has also worked
as Chief of Health insurance and as Executive Director (Customer Relationship
Management) in LIC of India.

4.2 Mrs. T.L.Alamelu (NON LIFE MEMBER)

Mrs. T. L. Alamelu joined the general insurance industry in 1983 as a Direct Recruit
Officer in The New India Assurance Co. Ltd. At New India Assurance, she has
worked in different capacities in the Head Office, Regional Office and Divisional
office acquiring in-depth knowledge of ground level operations, as well strategic
issues and concerns.

After serving in New India Assurance for over 25 years, upon Promotion she joined
United India Insurance Co. Ltd as Deputy General Manager in August 2008 and
subsequently got promoted to General Manager October 2012.

After serving the General Insurance industry for more than 36 years, Mrs. T L
Alamelu joined IRDAI as Member (Non-Life) on July 1st, 2019
4.3 Mr. Pravin Kutumbe, Member (Finance & Investment)

Mr. Pravin Kutumbe assumed charge as Member (Finance & Investment) in Insurance
Regulatory and Development Authority of India (IRDAI) on 12th March 2018. Prior
to joining IRDAI, he was Executive Director (Finance & Accounts) in LIC of India.

Mr. Pravin Kutumbe, a Chartered Accountant, has more than 33 years of experience
in Life Insurance Industry. He joined LIC of India as a Direct Recruit Officer in the
cadre of Assistant Administrative Officer in January 1985. He has worked as Chief
Investment Officer and Chief Financial Officer of LIC of India. Also worked as CEO
of LIC’s Overseas Operations in Fiji. He was a visiting faculty in Management
Institutions.
 Chapter 5: INSURERS

5.1. LIFE:

A] Regulation:-

Insurance Regulatory and Development Authority of India

(Appointed Actuary) (Amendment) Regulations2019.

Section 114A of Insurance Act, 1938 (4 of 1938) and sections 14 and 26 of the
Insurance Regulatory and Development

Authority Act, 1999, the Authority, in consultation with the Insurance Advisory
Committee, hereby makes the following

Amendment to the IRDAI (Appointed Actuary) Regulations, 2017, namely: -

1. Short title and commencement

a. These Regulations may be called the Insurance Regulatory and Development

Authority of India (Appointed Actuary) (Amendment) Regulations, 2019.

b. They shall come into force on the date of their publication in the Official Gazette.

2. in the IRDAI (Appointed Actuary) Regulations, 2017-

a. In Regulation 6-

I) the following shall be inserted after sub-regulation 6(b), namely: -

“(c): For business continuance, the insurer may need exemption from Regulation 5
for a further period beyond one year. Upon request of the insurer and based on merits
of the case, the Chairperson may grant extension for a further period not exceeding
two years.”
B]. Guidelines:

To All Insurance Companies and TPAs Re: Modified guidelines on Standardization in

Health Insurance Business

1. Reference is invited to Chapter I of the Guidelines on Standardization in Health

-

Insurance issued, Circular no. IRDNHLT/REG/CIR/146/07/2016 dated 291h July, 2016

(Guidelines), where Standard Definitions for 42 commonly used terms in health
insurance policies are defined.

2. In addition to the definitions notified in Chapter I of the above referred Guidelines,

-

the following two definitions are inserted as clause 43 and 44 with immediate effect:

3. List of Life Insurers

1. Life Insurance Corporation of India

2. HDFC Life Insurance Co. Ltd

3. Max Life Insurance Co. Ltd.

4. ICICI Prudential Life Insurance Co. Ltd

5. Kotak Mahindra Life Insurance Co. Ltd

6. Aditya Birla SunLife Insurance Co. Ltd.

7. TATA AIA Life Insurance Co. Ltd

8. SBI Life Insurance Co. Ltd.

9. Exide Life Insurance Co. Ltd.

10. Bajaj Allianz Life Insurance Co. Ltd.

Chapter 6: The Insurance Advisory Committee (Meetings)
Regulations, 2000

In exercise of powers conferred by clause (e) of sub-section (2) and sub-section (1)
of section 26 read with section 25 of the Insurance Regulatory and Development
Authority Act, 1999 (41 of 1999), the Authority, in consultation with the Insurance
Advisory Committee , hereby makes the following regulations, namely: -

6.1. Short title, extent and commencement.-

(1) These regulations may be called the Insurance Advisory Committee (Meetings)
Regulations, 2000.

(2) They shall come into force on the date of their publication in the Official
Gazette.

6.2. Definitions.-

In these regulations, unless the context otherwise requires:

(a) “Act” means the Insurance Regulatory and Development Authority Act, 1999
(41of 1999).

(b) “Advisory Committee” means the Insurance Advisory Committee as constituted

by the Authority pursuant to the provisions of section 25 of the Act.

(c) “Authority” means the Insurance Regulatory and Development Authority

established under sub-section (1) of section 3 of the Act.

(d) “Chairperson” means the Chairperson of the Authority.

(e) “Designated Officer” means any officer of the Authority charged with the duty
and responsibility of issuance of notice, circulation of agenda, recording and safe-
keeping of the minutes of the meeting of the Advisory Committee.
6.3. Procedure for meetings of the Advisory Committee.-

(1) The Advisory Committee may meet for the despatch of business, adjourn and
other wise regulate its meetings, as provided in these regulations.

(2) The Advisory Committee may meet as often as may be considered necessary
but not less than three times in a year, for advising the Authority on matters relating to
the making of the regulations under section 26 of the Act and also on such other
matters as may be prescribed under sub-section (5) of section 25 of the Act.

(3) The meetings of the Advisory Committee shall be held at such place and time as
may be decided by the Chairperson.

(4) For purposes of convenience of attention to business, the Chairperson may with
the consent of the Advisory Committee also constitute sub-committee of members
whose decision thereon will be available to the Advisory Committee.

(5) The notice and agenda for the meeting shall normally be circulated seven days
in advance by the Designated Officer. The notice and agenda may be delivered to the
members personally upon acknowledgement or despatched by registered post or
courier service or transmitted through any other secure and reliable modern means of
communication, as may be recognised under any law for the time-being in force.
Provided, however, that the Chairperson may convene

6.4. Quorum.-

(1) The quorum for transaction of business at a meeting of the Advisory Committee
or sub-committee shall be a minimum of one-third of the total strength. Provided,
however, that any fraction that might arise while calculating the one-third total
strength be disregarded.

(2) If at any such meeting, quorum is not present, the Chairperson or the presiding
member, as the case may be, shall after waiting for thirty minutes from the scheduled
commencement time of the meeting, adjourn the meeting for such hour on the same
day or some other day as he may think fit. Where at the adjourned meeting also the
required quorum is not present, the members present shall constitute the quorum and
proceed with the transaction of business.
(3) A member shall attend all the meetings of the Advisory Committee or sub-
committee, save where leave of absence has been sought and the same has been
granted by the Chairperson or the presiding member.

6.5. Minutes of the meetings.-

(1) The Chairperson or the presiding member shall cause the minutes to be recorded
of the proceedings at the meetings of the Advisory Committee or sub-committee in
such form and manner as may be considered appropriate by him.

(2) The minutes shall also contain the names of members present at the meeting.

(3) The minutes of each meeting shall contain a fair and correct summary of the
decisions arrived at the meeting.

(4) The designated officer shall send a copy of the minutes as finalised and
approved by the Chairperson or the presiding member, as the case may be, to each of
the members for his/her information.

6.6. Miscellaneous provisions.-

(1) Each member for attending the meetings of the Advisory Committee or sub-
committee shall be entitled to reimbursement of expenses, sitting fees, incidentals,
etc. from the Authority, as per the stipulations made in this behalf by the Authority
from time to time.

(2) No member, other than the Chairperson or a person specifically authorised by

him shall give information to the Press or to any other public media on matters
relating to the decisions taken at the meetings of the Advisory Committee or sub-
committee.

6.7 PRINCIPLES OF INSURANCE

1. Nature of contract:

Nature of contract is a fundamental principle of insurance contract. An insurance

contract comes into existence when one party makes an offer or proposal. A contract
should be simple to be a valid contract. The person entering into a contract should
enter with his free contract.

2. Principle of utmost good faith:

Under this insurance contract both the parties should have faith over each other. As a
client it is the duty of the insured to disclose all the facts to the insurance company.
Any fraud or misrepresentation of facts can result into cancellation of the contract.

3. Principle of Insurable interest:

Under this principle of insurance, the insured must have interest in the subject matter
of the insurance. Absence of insurance makes the contract null and void. If there is no
insurable interest, an insurance company will not issue a policy. An insurable interest
must exist at the time of the insurance. For example, a creditor has an insurable
interest in the life of a debtor, a person is considered to have an unlimited interest in
the life of their spouse etc.

4. Principle of Indemnity:

Indemnity means security or compensation against loss or damage. The principle of

indemnity in such principle of insurance stating that insured may not be compensated
by the insurance company in an amount exceeding the insured’s economic loss. In
type of insurance the insured would be compensation with the amount equivalent to
the actual loss and not the amount exceeding the loss.

This is a regulatory principal. This principle is observed more strictly in property

insurance than in life insurance. The purpose of this principle is to set back the
insured to the same financial position that existed before the loss or damage occurred.

5. Principal of subrogation:

The principle of subrogation enables the insured to claim the amount from the third
party responsible for the loss. It allows the insurer to pursue legal methods to recover
the amount of loss. For example, the insurance company will compensate your loss
and will also sue the third party to recover the money paid as claim.
6. Double insurance:

Double insurance denotes insurance of same subject matter with two different
companies or with the same company under two different policies. Insurance is
possible in case of indemnity contract like fire, marine and property insurance.
Double insurance policy is adopted where the financial position of the insurer is
doubtful. The insured cannot recover than the actual loss and cannot claim the whole
amount from both the insurers.

7. Principle of proximate cause:

Proximate cause literally means the “nearest cause”. This principle is applicable when
the loss is the result of two or more causes. The proximate cause means; the most
effective cause of loss is considered. This principle is applicable when there are series
of causes of damage or loss.
Chapter7: INSURANCE REGULATORY AND
DEVELOPMENT AUTHORITY ACT, 1999

What is IRDA Act?

Insurance Regulatory and Development Authority of India Act was passed by the
Parliament in the year December 1999. The Act received the President’s approval in
the year January 2000. The Act intends to protect the interest of the insurance policy
holders. It also inspires and secures the systematic growth of the insurance industry.

What is IRDA Format for Insurance Industry?

IRDA today set a standard format for all insurance sector in India. Life insurance,
health insurance, marine insurance, etc. Insurance regulator IRDA today set a
standard format for all insurance company to improve transparency and help people
make informed decisions.

An Act to provide for the establishment of an Authority to protect the interests of

holders of insurance policies, to regulate, promote and ensure orderly growth of the
insurance industry and for matters connected therewith or incidental thereto and
further to amend the Insurance Act, 1938, the Life Insurance Corporation Act, 1956
and the General Insurance Business (Nationalisation) Act, 1972.

BE it enacted by Parliament in the Fiftieth Year of the Republic of India

7.1. Short title, extent and commencement.

(1) This Act may be called the Insurance Regulatory and Development Authority
Act, 1999.

(2) It extends to the whole of India.

(3) It shall come into force on such date* as the Central Government may, by

notification in the Official Gazette, appoint: Provided that different dates may be
appointed for different provisions of this Act and any reference in any such provision
to the commencement of this Act shall be construed as a reference to the coming into
force of that provision.
7.2. Definitions

(1) In this Act, unless the context otherwise requires,--

(a) "Appointed day" means the date on which the Authority is established under sub-
section (1) of section 3;

(b) "Authority" means the Insurance Regulatory and Development Authority 1

[Of India] established under sub-section (7) of section 3;

(c) "Chairperson" means the Chairperson of the Authority;

1. Inserted by Insurance Laws (Amendment) Act, 2015

(d) "Fund" means the Insurance Regulatory and Development Authority Fund
constituted under sub-section (1) of section 16;

(e) "Interim Insurance Regulatory Authority" means the Insurance Regulatory

Authority set up by the Central Government through Resolution No. 17(2)/94- Ins.-V,
dated the 23rd January, 1996;

2. [(F) "Intermediary" or "insurance intermediary" includes insurance brokers,

reinsurance brokers, insurance consultants, corporate agents, third party administrator,
surveyors and loss assessors and such other entities, as may be notified by the
Authority from time to time.]

(g) "Member" means a whole-time or a part-time member of the Authority and

includes the Chairperson;

(h) "Notification" means a notification published in the Official Gazette;

(I) "Prescribed" means prescribed by rules made under this Act;

(j) "Regulations" means the regulations made by the Authority.

7.3. Establishment and incorporation of Authority

(1) With effect from such date as the Central Government may, by notification,
appoint, there shall be established, for the purposes of this Act, an Authority to be
called "the Insurance Regulatory and Development Authority 3[of India]".

(2) The Authority shall be a body corporate by the name aforesaid having perpetual
succession and a common seal with power, subject to the provisions of this Act to
acquire, hold and dispose of property, both movable and immovable, and to contract
and shall, by the said name, sue 6r be sued.

2. Substituted by the Insurance Laws (Amendment) Act, 2015Prior to its substitution,

clause (f) read as under:

(f) Intermediary or insurance intermediary includes insurance brokers, reinsurance

brokers, insurance consultants, surveyors and loss assessors;

3. Inserted ibid.

(3) The head office of the Authority shall be at such place as the Central Government
may decide from time to time.

(4) The Authority may establish offices at other places in India.

7.4. Composition of Authority

The Authority shall consist of the following members, namely:--

(a) A Chairperson;

(b) Not more than five whole-time members;

(c) Not more than four part-time members,

To be appointed by the Central Government from amongst persons of ability, integrity

and standing who have knowledge or experience in life insurance, general insurance,
actuarial science, finance, economics, law, accountancy, administration or any other
discipline which would, in the opinion of the Central Government, be useful to the
Authority:
Provided that the Central Government shall, while appointing the Chairperson and the
whole-time members, ensure that at least one person each is a person having
knowledge or experience in life insurance, general insurance or actuarial science,
respectively.

7.5. Tenure of office of Chairperson and other members

. (1) The Chairperson and every other whole-time member shall hold office for a term
of five 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 sixty-five years: Provided further that no person shall hold office
as a whole-time member after he has attained the age of sixty-two years.

(2) A part-time member shall hold office for a term not exceeding five years from the
date on which he enters upon his office.

(3) 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 three months; or

(b) Be removed from his office in accordance with the provisions of section 6.

7.6. Removal from office

(1) The Central Government may remove from office any member who--

(a) is, or at any time has been, adjudged as an insolvent; or

(b) Has become physically or mentally incapable of acting as a member; or

(c) Has been convicted of any offence which, in the opinion of the Central
Government, involves moral turpitude; or

(d) Has acquired such financial or other interest as is likely to affect prejudicially his
functions as a member; or
(e) Has so abused his position as to render his continuation in office detrimental to the
public interest.

(2) No such member shall be removed under clause (d) or clause (e) of subsection (1)
unless he has been given a reasonable opportunity of being heard in the matter.

7.7. Salary and allowances of Chairperson and members

(1) The salary and allowances payable to, and other terms and conditions of service
of, the members other than part-time members shall be such as may be prescribed.

(2) The part-time members shall receive such allowances as may be prescribed.

(3) The salary, allowances and other conditions of service of a member shall not be
varied to his disadvantage after appointment.

7.8. Bar on future employment of members

The Chairperson and the whole-time members shall not, for a period of two years
from the date on which they cease to hold office as such, except with the previous
approval of the Central Government, accept--

(a) Any employment either under the Central Government or under any State
Government; or

(b) Any appointment in any company in the insurance sector.

7.9. Administrative powers of Chairperson

The Chairperson shall have the powers of general superintendence and direction in
respect of all administrative matters of the Authority.

7.10. Meetings of Authority

(1) The Authority shall meet at such time and places and shall observe such rules and
procedures in regard to transaction of business at its meetings (including quorum at
such meetings) as may be determined by the regulations.
(2) The Chairperson, or if for any reason he is unable to attend a meeting of the
Authority, any other member chosen by the members present from amongst
themselves at the meeting shall preside at the meeting.

(3) All questions which come up before any meeting of the Authority shall be decided
by a majority of votes by the members present arid voting, and in the event of an
equality of votes, the Chairperson, or in his absence, the person presiding shall have a
second or casting vote.

(4) The Authority may make regulations for the transaction of business at its
meetings.
Chapter 8: IMPACT OF NEW IRDA REGULATIONS

8.1 Meaning

IRDA is a statutory body that regulates the insurance sector in India, to protect the
interests of policyholders, while ensuring growth of the insurance industry. Life is
unpredictable and loss of life can negatively affect familiar and everyone involved
especially if the deceased and protection against loss of income that would if the
insured passed away.

IRDA was constituted and established by an Act of Parliament of India called the
Insurance Regulation and Development Authority Act, 1999. IRDA is the watchdog
and controller of the insurance industry in India and it works to bring better regulation
for the welfare of policyholders.

Earlier in the year 2010, IRDA revised the regulation applicable to the Unit -Linked
Insurance Policies (ULIP). Important point in the regulation were.

 Lock-in period of the products increased to 5 years from 3 years

 Minimum premium payment term increased to 5years
 Insurance cover made compulsory for all insurance products.
 Maximum limit on expenses was introduced. Prior to the regulations,
policyholders were subjected to huge losses due to heavy expenses

8.2 Some impacts of IRDA regulation are as follows:

A statutory authority as an autonomous body was established under the provision

of IRDA by the Government of India with the objective of regulating, directing
and controlling the Insurance sector for ensuring smooth function of the Insurance
sector in India. This authority is called as “Insurance Regulation and Development
Authority” Which came into existence with effect from 1st April 2000.

1. Impact over Regulation of Insurance Sector

There is great impact of IRDA in the overall regulation of the India Insurance
sector.
The IRDA is having close observation over the different activities of insurance
sector in India in order to ensure the proper protection of the policy holder’s
interests and scope of regulation is constantly increasing.

2. Impact over policyholders interests protection

As far as the matter of protection of Policyholders interests is concerned, it is the

one objective of the IRDA and IRDA is also trying its level best in the content.
Thus, it is clear that the impact of IRDA over Policyholders interest’s protection is
significant.

3. Impact over awareness to insurance

IRDA is not only emphasizing over the introduction of different rules and
regulation in the insurance sector in order to protect the interests of policyholders
but also it is trying to make the activities of insurance of the society to the
insurance.

4. Impact over Customers education

IRDA is attempting to make all the significant and material information associated
with insurance products public and it has also made mandatory for the insurers to
disclose all the secret information to the customers.

5. Impact over insurance market

The impact of IRDA over the insurance market is not hidden to any one of us.
There is a great change in the insurance market whether with respect to insurance
product, marketing, competition and customers’ awareness.

6. Impact over insurance objective

The introduction of private players in the insurance sector has made the insurance
sectors diversified, dynamic and competitive, which has also brought an amazing
change in the trends of policyholders and as a result insurance objective for the
people for the society has been thoroughly changed.
8.3 Effect of Insurance Regulatory and Development Authority
(IRDA)

• The effect on the Regulation of Insurance Industry

• The effect over the protection of policyholders

• The effect of Awareness about Insurance policy

• The effect over Indian Insurance Market

• The effect over the Development of Insurance Product

• The effect on Competition between Private and Public sector

 Chapter 9: Ombudsman

9.1 Meaning

(I)The governing body shall appoint one or more persons as ombudsman for the
purpose of these rules.

(2) The Ombudsman selected may be drawn from a wider circle including those who
have experience or have been exposed to the industry, civil service, administrative
service, etc. in addition to those drawn judicial service.

(3) An Ombudsman shall be appointed by the Governing Body from a panel prepared
by the Committee consisting of:-

(a) Chairman of Insurance Regulatory Authority -Chairman

(b) Two representatives or Insurance Council –Member including one each from the
Life Insurance, Business and from General Insurance Business respectively.

(c) One representative of the Central Government -Member

9.2 Term or Office:-

An Ombudsman shall be appointed for a term of three years or till the incumbent
attains the age of sixty five years, whichever is earlier. Reappointment is not
permitted.

Provided that no person shall hold office as such Ombudsman after he has attained the
age of 65 years.

9.3 Removal from office:-

(1) An Ombudsman removed from service for gross misconduct committed by him
during his term of office.

(2) The Governing Body may appoint such person as it thinks fit to conduct enquiry
in relation to misconduct or the Ombudsman.
(3) All enquiries on misconduct will be sent to Insurance Regulatory Authority which
may take a decision as to the proposed action to be taken against the ombudsman.

(4) On recommendations of the Insurance Regulatory Authority if the Governing

Body, is of opinion that the Ombudsman is guilty of misconduct. It may terminate his
services.

9.4 Pay and Allowances of Ombudsman: -

(1) The Ombudsman shall be allowed a fixed pay of rupees twenty six thousand per
month. Any pension to which he is entitled from the Central Government or State
Government or any other organization / institution shall be deducted from his salary.

(2) The other allowances and perquisites of the Ombudsman shall be such as may be
specified by the Central Government.

9.5 Territorial Jurisdiction of ombudsman:-

(1) The office of the Ombudsman shall be located at such place as may be specified
by the Insurance council from time to time.

(2) The Governing Body shall specify the territorial jurisdiction of each Ombudsman.

(3) The Ombudsman may hold sitting at various places within his area of jurisdiction
in order of expedite disposal or complaints.

9.6 Power Ombudsman:-

(1) The ombudsman may receive and consider:-

(a) Complaint under rule 13;

(b) Any partial or total repudiation or claims by an insurer;

(c) Any dispute in regard to premium paid or payable in terms or the policy:

(d) Any dispute on the legal construction of the policies in so far as such disputes
relate to claims:
(e) Delay is settlement of claims:

(i) Non-issue of any insurance document to customers after receipt of premium

(2)The ombudsman shall act as counsellor and mediator in matters which and within
his terms of reference and, if requested to do so in writing by mutual agreement by the
Insured person and insurance company.

(3)The ombudsman’s decision whether the complaint is fit and proper for being
considered by it or not shall be final.

(A) These rules shall be called the Insurance Ombudsman Rules.

(B) They shall come into force from the date of their publication in the Official
Gazette.

The objects of these Rules is to resolve all complaints of all personal lines of
insurance, group insurance policies, policies issued to sole proprietorship and micro
enterprises on the part of insurance companies and their agents and intermediaries in a
cost effective and impartial manner.

4. Definitions. — (1) in these rules, unless the context otherwise requires,—

(a) “Award” means an award passed by the Insurance Ombudsman under rule 17;

(b) “Financial year” means a period of twelve months commencing on the 1st day of
April and ending on the 31st day of March;

(c) “Insurance Ombudsman” means the Insurance Ombudsman established under

rule7.

(2) All other words and expressions used in these rules but not defined shall have the
meanings respectively assigned to them in the Insurance Act, 1938 and the Insurance
Regulatory and Development Authority Act, 1999.

Executive Council of Insurers

(1) There shall be an Executive Council of Insurers consisting of nine members

including the Chairperson.
(2) The members of the Executive Council of Insurers shall comprise of—

(i) Two persons representing life insurers to be nominated by the Life Insurance
Council

(ii) Two persons representing General insurers, other than stand-alone health insurers,
to be nominated by the General Insurance Council;

(iii) One person representing stand-alone health insurers to be nominated by the

General Insurance Council;

(iv) One representative of the IRDAI; and

(v) One representative of the Central Government in the Ministry of Finance from the
Department of Financial Services not below the rank of Director;

(3) The Chairperson of the Executive Council of Insurers shall be either the Chairman
of the LIC of India or the Chairman of the GIPSA by rotation.

(4) The term of the Chairperson and members of the Executive Council of Insurers
shall be three years from the date of assumption of charge.

9.7 Insurance Ombudsman

(1) There shall be established such number of Insurance Ombudsman for such
territorial jurisdiction as the Executive Council of Insurers may specify, for
discharging the duties and functions prescribed under these rules.

(2) An Ombudsman shall be selected from amongst persons having experience of the
insurance industry, civil service, administrative service or judicial service.

(3) An Ombudsman shall be selected by a Selection Committee comprising of—

(a) Chairperson of the IRDAI, who shall be the Chairman of the Selection
Committee.
9.8 Duties and functions of Insurance Ombudsman

(1) The Ombudsman shall receive and consider complaints or disputes relating to—

(a) Delay in settlement of claims, beyond the time specified in the regulations, framed
under the Insurance Regulatory and Development Authority of India Act, 1999;

(b) Any partial or total repudiation of claims by the life insurer, General insurer or the
health insurer.

(c) Disputes over premium paid or payable in terms of insurance policy;

(d) Misrepresentation of policy terms and conditions at any time in the policy
document or policy contract;

(2) The Ombudsman shall act as counsellor and mediator relating to matters specified
in sub-rule

(1) Provided there is written consent of the parties to the dispute.

(3) The Ombudsman shall be precluded from handling any matter if he is an interested
party or having conflict of interest.

(4) The Central Government or as the case may be, the IRDAI may, at any time refer
any complaint or dispute relating to insurance matters specified in sub-rule (1), to the
Insurance Ombudsman and such complaint or dispute shall be entertained by the
Insurance Ombudsman and be dealt with as if it is a complaint made under rule 14.

9.9 Manner in which complaint to be made

Any person who has a grievance against an insurer, may himself or through his legal
heirs, nominee or assignee, make a complaint in writing to the Insurance Ombudsman
within whose territorial jurisdiction the branch or office of the insurer complained
against or the residential address or place of residence of the complainant is located.
9.10 Advisory Committee.

(1) An Advisory Committee consisting of eminent persons not exceeding five and
including one Central Government nominee shall be constituted by the IRDAI to
review the performance of the Insurance Ombudsman from time to time.

(2)The IRDAI shall decide the time, venue and quorum of the meeting of the
Advisory Committee.

(3)The Advisory Committee shall submit its report to the IRDAI for review and
further action as deemed necessary.
 Chapter 10: Vigilance of IRDA

If you have any complaint against any official in this office, you can complain to the
Head of this Authority, or the Chief Vigilance Officer/The Superintendent of Police,
Central Bureau of Investigation and The Secretary, Central Vigilance Commission.

10.1 Procedure for lodging the complaints

Ø Complaints can be lodged against the officials of Insurance Regulatory and

Development Authority of India (IRDAI). For complaint/grievance against
intermediaries/TPA/Insurance Company etc., separate Portal is available on IRDAI
website.

Ø The Authority does not entertain anonymous/pseudonymous complaints. Hence,

the proper name, address and contact details of the complainant are required on
complaints made so as to enable the authority to establish genuineness of the
complaint.

Ø The Complaint must be brief and contain factual details, verifiable facts and
related matters. It should not be vague or contain absurd allegations and sweeping
statements since these are liable to be filed.

Ø Preferably, the complaint should be addressed to CVO directly in sealed envelope

marked as ‘Confidential’

10.2CODE OF CONDUCT

The IRDA has formulated a code of conduct for the marketing staff which comprises
of two broad groups’ heads viz. “Do’s and Don’ts

They are listed herewith:

Do’s Don’ts

Identification of marketing staff and the Solicit or procure insurance business

insurance agency certificate of licence to without holding a proper authorization.
be shown to the prospect on demand.

Match the needs of her client with various Induce the prospect omit to disclose the
products available with his insurer. material information in the proposal
form.

Work out the premium to be charged so Induce the prospect to submit wrong
that his/her prospect is able to weigh the information in the proposal form or in
economic or financial implication of the the documents submitted the insurer for
proposal on her resources. acceptance of the proposal.

Bring to the notice of his/her client the Behave in discourteous manner.

implication of various questions in the
proposal form and other documents and
advice the client to disclose all the
material information.

Disclose to the insurer all relevant Interfere with any proposal introduced
information. by any other insurance marketers.

Inform the prospect about acceptance or Part with or share his incentive with
rejection of the proposal by the insurer. prospect or with any other person.
Assist the policy holder in matters of Receive a share of the policy proceeds
claim statement, effecting from the bestiary.
nomination/assignment, revive, change of
address. Exercise old venous options.

10.3Evalution of I.R.D.A.:

The I.R.D.A. Act, 1999 is a landmark legislation changing the structure of the
insurance industry and the method of regulation of the industry, it fulfils its purpose
by stating in detail the structure and power of the regulatory authority and giving the
basic provisions which will help the I.R.D.A. in supervising and regulating the
insurance business in the changing and liberalised scenario. It has mentioned capital
structure, solvency margin and code of conduct for the insurers as well as insurance
intermediaries and agents. The I.R.D.A. Act has laid down the foundation upon which
a very elaborate and effective regulatory has been built. The I.R.D.A. has given
detailed provisions under various sections and under its chapters and schedules and
yet has kept the ways upon for further regulations and modifications. 80 Upon the
entry of private sector in the liberalised and competitive eta. G.I.C. has to improve its
operations and shall have to gear all its machineries towards customer satisfaction. In
marketing its different products door to door canvassing would prove effective and
that is the purpose which I.R.D.A. expects from the insurance companies.

The insurance business is deep rooted in India. It was started in 1818 with
establishment of Oriental Insurance Company in Calcutta. To promote transparency,
regulation and orderly conduct of insurance business in the country, the Insurance
Regulatory and Development Authority of India (IRDAI was established as statutory
body in year 2000 under the IRDAI Act’ 1999. It came into existence after the
recommendation of Malhotra Committee report. The functions of IRDA include
regulation, development and research related to insurance industry.

10.4 Departments of IRDA

1. Accounts Department

2. Administration Department

3. Corporate Services Department

4. Human Resources Department

5. Information Technology Department

6. Internal Audit Vigilance Department

7. Legal Department

8. Official Language Implementation Department Actuarial Department

9. Agency Distribution Department

10. Finance and Accounts (Life) Department

11. Finance and Accounts (Non-Life) Department

12. Health Department

13. Intermediaries Department

14. Investment Department

15. Life Insurance Department

10.5 IRDA Health Regulation 2016

 Health Insurance Companies Can Offer Pilot Products: To ensure insurers to

offer innovative products and features. IRDA’s new regulations governing health
insurance companies to offer pilot products. These pilot products will go back to
 functioning as regular health insurance products. The continuation of the pilot
product for a term of 5 years.
 Data Disclosure To Improve Transparency :
The new regulation effective from 2016 will help improve data disclosure, which
in turn help in transparency. In addition to repudiated claims, insurers have
another category of closed claims which couldn’t be paid back due to incomplete
documentation or failure. A high number of closed claim allow insurers to project
a lower percentage of rejected claim. As per the new regulations insurers can’t
close a claim in their books.
 Early Buyers And Health Conscious Customers To Get Discounts:
In order to motivate and increase awareness regarding the importance of health
insurance among people, individuals who purchase health insurance early in life,
take preventive measures or renew their policy regularly.
 Loan Credit Linked Health Insurance:
Term insurance based on an individual‘s existing loan or credit is offered by many
insurances providers. The benefit provided by these plans is dependent on the
condition that upon the death of the insured, their nominee can utilize the claim
amount of the policy to pay back the loan. These policies however do not give any
such option in case the insured has fallen ill and is unable to repay the loan
amount due to the sudden medical expenses which he has to incur towards the
illness. The new regulation provide respite in regard , which means that health
insurance companies will now be offering linked group health insurance products
which will be for a maximum term of 5 years.
 Agents Will Not Earn commission from portability :

According to the new health insurance regulations passed by IRDA this year
insurance agent will to earn any commission if customer choice health insurance
portability. They will however continue to earn commission when a policy holder
renew the same insurance policy regularly.

 Combi plans can comprise of any life and health plan: Following the new
IRDA health insurance regulations, health insurers can offer combi plans which
icon to be a hybrid of any health and life (endowment, money back or UPI) plans.
 SUGGESTION

1. Understanding hidden clauses of Insurance Policies-Government, non-

government organization (NGO) should come forward to guide the people
about the hidden clauses of the insurance policies which, if not understood,
can play have with the hard earned money of the people.
2. Prompt Disposal of Cases- Number of consumer forums at the district
level should be increased and proper staff strength be provided to facilitate
prompt disposal of the cases.
3. Punishment for Faulting Intermediaries – There should be severe
punishment to the faulting insurance agents selling defective policies by
misrepresenting the facts.
4. Formulation of Policyholders’ Charters – Government should make laws
fixing time schedules for payment of the policy amount in the event of
death/ disability and even in general cases of maturity of the policy.
5. Learning lesson in Life Securitisation Companies Overseas – India could
benefit from the lesson learnt by other countries in life securitization. Thee
protected cell structures could be emulated in order to facilitate utilisation
by insurance companies of securitization.
6. Shift in Emphasis- The emphasis should be shifted away from recovery of
money from defaulting borrowers to risks to the capital markets and
raising of capital there from.
 CONCLUSION

The study, the life insurance legislation in India, the history of life insurance in
India, the IRDA Act, and regulations made there under the role of IRDA Act, 1990 in
the promotion and development of life insurance business in India and safeguarding
the interest of stakeholders as also to analyse the impact of privatisation of life
insurance business on the LIC.

The central government has proposed to enhance foreign direct investment (FDI)
in insurance sector to 49% in its next wave of reforms announced recently. As
present foreign investment in private insurance companies are restricted to 26% of
their capital, which is now proposed to be increased to 49% by passing an amendment
to the insurance act. If the Indian promoters are unable to contribute their share of the
capital they will not be able to grow. Foreign companies with deep pockets will be
able to fill this gap; if they are allowed to invest up to 49% of the capital .It is
estimated that the private insurer need about Rs 60,000 crore of additional capital
during the next five years. Therefore, the raising of FDI cap to 49% will come handy
for the foreign partner to increase their stake in the company without the local partner
having to put matching capital in to the company. With 26% FDI cap in the last few
years, capital worth Rs 5,950.30 crore has come to India. While there is a need for
additional long term capital, there is an even greater need to increase the commitment
of the foreign partners. Under different regulations of IRDA the insurers in India are
required to deposit with the Reserve Bank of India (RBI) for and on behalf of the
central government of India the prescribed amounts, either in cash or in approved
securities estimated at the market value of the securities on the day of deposit, or
partly in cash and party in approved securities. Every insurer is required to invest and
keep invested certain amount of assets as determined under the Insurance Act. The
funds of the policy holders cannot be invested (directly or indirectly) outside India.
An insurer should maintain, at all times an excess of the value of his assets over the
amount of his liabilities of not less than the relevant amount and Insurance companies
and insurance agents in India are subject to tax for the premium and the commissions
received by them respectively, under the Indian Income Tax Act1963.
 BIBLIOGRAHY

 Text of TYBBI

 www.irdai.gov.in

 www.policyholder.gov.in

 www.wikipedia.org

 IRDA Principle and protocol-Charles D.Khatson.