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CHAMELIDEVI INSTITUTE OF

MANAGEMENT & RESEARCH

Presented By :Amit Sharma

Pankaj Kukreja

PGDM IIInd

Guided by :Prof. Manish Joshi

Presentation OnIRDA Act, 1999

December 12, 2010

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IRDA( Insurance Regulatory

&Development Authority )

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Road Map

History

Introduction of IRDA

Registration under IRDA

Cancellation of registration

Expectations from IRDA

Duties, Powers and Functions of IRDA

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Contd..

Definition Of Insurance

Indian Insurance Company

Various challenges faced in Insurance Markets

Parties

Restriction On name of Insurer

Principles of Insurance

Types of Insurance

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History(Governed by Insurance Act -1938,Now By IRDA Act-

1999)

Methods of transferring or distributing risk were practiced by Chinese

and Babylonian traders as long ago as the 3rd and 2nd millennia BC.

The Greeks and Romans introduced the origins of health and life

insurance c. 600 AD.

India:- First Indian insurance company was Calcutta Insurance

Company which setup in 1798 exclusively for Europeans. The

Bombay Life Assurance Society formed in 1870 Insured Indians first

time.

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Contd..

Indian life assurance companies act ,1912 was first

statutory act to regulate life business.

In 1928 the Indian insurance companies act enacted.

In 1938 insurance act amended to consolidate

legislation and effective control over the activities of

insurer.

19th Jan.1956 LIC is formed by absorbing 154

Indian,16 non-Indian insurer and 75 provident

societies.

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Contd..

GIC was Incorporated as a company in Year 1971 . In 1972

General Insurance Business(Nationalization) Act passed with

effect from 1st Jan 1973 GIC is formed by amalgamation of 107

insurer and 4 company formed named as

National Insurance Co. Ltd.

The New India Assurance Co. Ltd.

The Oriental Insurance Co. Ltd.

The United India insurance co. Ltd.

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IRDA

In 1993 Government setup a committee under

chairmanship of R.N. Malhotra ,former Governor of

RBI for reforms in Insurance sector.Recommendations are :-

IRDA was constituted as an autonomous body to

regulate and develop the insurance industry.Foreign companies are allowed up to 26% of paid up

capital and can operate with an Indian company.

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Composition of Authority under IRDA Act, 1999

The Authority is a ten member team

consisting of

(a) a Chairman;

(b) five whole-time members;

(c) four part-time members

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Mr. Hari NarayanChairman, IRDA

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Registration under IRDA

The application accompanied by:-

A certified copy of memorandum and article of

association.

Name, address and occupation of Directors.

A statement of the classes of insurance business

done/to be done along with a statement of deposits

with the Reserve Bank of India.

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Cont

The receipt showing payment of fee (as

determined by IRDA regulation) not

exceeding Rs.50,000 for each class of

business.

Such other document as may be specified by

IRDA.

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Cancellation of Registration

He fails to comply with the requirement of deposit

with the RBI.

He fails to comply with the requirement relating to

sufficiency of assets(assets-liabilities)

The whole of his deposit has been refunded to him

on court order when he cease to carry on business

and all liabilities has been satisfied/provided for.

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Cont

He defaults in complying with or contravenes

any requirement of insurance act/any rule/order

made or direction issued there under,

The IRDA has reason to believe that any claim

are unpaid for 3 month after final court order in

India.

He carries on any other business,

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Cont

His business has been transferred to any other

person/amalgamated with any other insurer.

He defaults in complying with any directions

issued/order maid by IRDA .

He default in complying with or contravenes any

requirement of Companies Act/LIC Act/GIC

Act/FEMA etc

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Expectations from IRDA

To protect the interest of and secure fair treatment to

policyholders.

To bring about speedy and orderly growth of the insurance

industry for the benefit of the common man, and to provide long

term funds for accelerating growth of the economy.

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

financial soundness, fair dealing and competence of those it

regulates..

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Contd.. 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.

To ensure speedy settlement of genuine claims, to prevent insurance

frauds and other malpractices and put in place effective grievance

redressal machinery.

To promote fairness, transparency and orderly conduct in financial

markets dealing with insurance and build a reliable management

information system to enforce high standards of financial soundness

amongst market players.

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Duties, Powers and Functions of IRDA

To regulate, promote and ensure orderly growth of the insurance

business and re-insurance business.

Issue to the applicant a certificate of registration, renew,

modify, withdraw, suspend or cancel such registration .

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;

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Cont.

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.

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Cont..

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.

Control and regulation of the rates, advantages, terms

and conditions that may be offered by insurers in respect

of general insurance business .

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Cont

y 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.

y Regulating investment of funds by insurance companies.

y Regulating maintenance of margin of solvency

y Adjudication of disputes between insurers and

intermediaries or insurance intermediaries.

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Cont

A certified copy of the Published prospectus if any and,

Standard policy forms of the insurer and statements of the insurer and

statements of the assured rates, advantages, terms and conditions to be

offered in connection with insurance policies, together with a certificate

in connection with life business by an actuary.

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Definition of Insurance

Insurance is pooling of risks. In contract of

insurance ,the insurer (insurance company)

agree/undertakes, in consideration of a sum of

money (premium), to make good the loss

suffered by the insured against a specified risk

such as fire , accident etc or any contingency.

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Cont

In Dec. 2000 subsidiaries of GIC were restructured as

independent company. And in July 2002 parliament

passed a bill of De-linking of four subsidiaries of GIC.

Today there are 14 General insurance companies

including ECGC & Agricultural insurance corporation

of India and 14 life Insurance company operating in

India.

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Indian Insurance company

A company defined and registered under the

companies act in which aggregate holding of equity

shares by a foreign company either by itself or by

nominees/subsidiaries ,does not exceed 26% paid

up equity capital and whose sole purpose is to carry

on life/general/reinsurance business

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Various challenges faced in Insurance

Markets are

1. Industry Challenges

Shifting consumer requirements( everyone wantsproducts tailored to them, customization)

Heightened competition.

Global economic meltdown.

.

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Contd..

2. Business Challenges

Distribution Channel pressures and emerging consumer

demands for mass customization and hydrid products are

moving rapid product development from being

a competitive advantage to a necessity.

3. Process Challenges

Lack of stream lined processes, change management,

automated processes

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Parties

There are two parties to an Insurance contracts

as:-

Insurer/assurer/underwriter,

Insured/assured/beneficiary

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Insurer

(a) any individual or unincorporated body of individuals or body

corporate incorporated under the law of any country carrying

on insurance business which

(i) carries on that business in or

(ii) has his or its principal place of business or is domiciled in

(iii) with the object of obtaining insurance business, employs a

representative, or maintains a place of business, in India

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Contd

(b) Any body corporate carrying on the business

of insurance, which is a body corporate

incorporated under any law for the time being in

force in or stands to any such body corporate in the

relation of a subsidiary company within the

meaning of the Indian CompaniesAct, 1913

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Insurance agent

Means an insurance agent licensed under

section 42 who receives or agrees to receive

payment by way of commission or other

remuneration in consideration of his

soliciting or procuring.

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Policy

The document laying down the term of contract

is called (insurance) policy.

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PrincipalAgent

A person who is in consideration of any commission,-

-

(i) performs any administrative and organising

functions for the insurer, and

(ii) procures general insurance business whether

wholly or in part by employing or causing to be

employed insurance agents on behalf of the insurer.

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Special agent

A person who is consideration of any

commission, procures life insurance business for

the insurer whether wholly or in part by

employing or causing to be employed .

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Restriction on name of insurer

An insurer shall not be registered by a name

identical with that by which an insurer in

existence is already registered, or so nearly

resembling that name .

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Principles of Insurance

Principle of Insurable interest.

Principle of Utmost good faith

Principle of Indemnity.

Principle of Contribution.

Principle of Subrogation.

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Types ofInsurance

LifeInsurance

Endowment Policy

Term Insurance Policy

Whole Life Policy

Limited Payment Life Policy

Joint Life Policy

Convertible Whole Life Policy

Annuities or Pension Plans

GeneralInsurance

Fire Insurance

Marine InsuranceOther non Life Insurance

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Other Type of insurance

Property insurance

Automobile insurance

Aviation insurance

Boiler insurance

Builder's risk insurance

Crop insurance

Earthquake insurance

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Cont

Flood insurance

Home insurance

Landlord insurance

Marine insurance

Terrorism insurance etc.

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Life insurance business

Business of effecting contracts of insurance upon

human life, including any contract whereby the

payment of money is assured on death (except

death by accident only) or the happening of any

contingency dependent on human life.

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Type of Life Insurance Polices

Endowment Policy

Term insurance Policy

Whole Life Policy

Limited Payment Life Policy

Joint Life Policy

Convertible Whole Life Policy

Annuities

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General insurance

It means fire, marine / miscellaneous

insurance business whether carried on

singly or in combination with one/more of

them

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Types of General Insurance

Fire insurance Policies:

(a) Specific Policy

(b) Comprehensive Policy

(c) Valued Policy

(d) Unvalued Policy

(e) Floating Policy

(f) Replacement or Reinstatement Policy

(g)Blanket Policy

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Marine Insurance Policies

(a) Voyage Policy

(b) Time Policy

(c) Mixed Policy

(d) Valued Policy:

(e) Open and Unvalued Policy

(f) Floating Policy

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Health/ medical insurance:

This cover only two type of

benefits

Re-imbursement of medical

expenses related to specific

diseases and

Hospitalization

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Some of policies are as

Individual/Group Mediclaim policy

Bhavishya Arogya policy

Jan Arogya Bima

Overseas medical cover

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List of Life Insurers

Bajaj Allianz Life Insurance Company Limited

Birla Sun Life Insurance Co. Ltd

HDFC Standard life Insurance Co. Ltd

ICICI Prudential Life Insurance Co. Ltd.

ING Vysya Life Insurance Company Ltd.

Life Insurance Corporation of India

Max New York Life Insurance Co. Ltd

Met Life India Insurance Company Ltd.

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Cont

Kotak Mahindra Old Mutual Life Insurance Limited

SBI Life Insurance Co. Ltd

Tata AIG Life Insurance Company Limited

Reliance Life Insurance Company Limited.

Aviva Life Insurance Co. India Pvt. Ltd.

Shriram Life Insurance Co, Ltd.

Sahara India Life Insurance

Bharti AXA Life Insurance

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Cont Canara HSBC Oriental Bank of Commerce Life Insurance

Religare Life Insurance

DLF Pramerica Life Insurance

Star Union Dai-ichi Life Insurance

Agriculture Insurance Company of India

Apollo DKV Insurance

Cholamandalam MS General Insurance

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Cont

National Insurance Company Ltd

New India Assurance

Oriental Insurance Company

Reliance General Insurance

Royal Sundaram Alliance Insurance

Shriram General Insurance Company Limited

Tata AIG General Insurance

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Cond.

Future Generali Life Insurance

IDBI Fortis Life Insurance

HDFC Ergo General Insurance Company

ICICI Lombard General Insurance

IFFCO Tokio General Insurance

Universal Sompo General Insurance Co. Ltd

United India Insurance

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Queries are invited

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Thank You

for your attention