INTRODUCTION OF IRDA
CONSTITUTION OF IRDA
MISSION STATEMENT OF IRDA
OBJECTIVES OF IRDA
FUNCTIONS, DUTIES AND POWERS OF
IRDA
LAWS AND REGULATIONS
PROCEDURE OF ISSUE OR RENEWAL OF
LICENSE BY IRDA
QUALIFICATION OF THE APPLICANT
In april 1993, the government of India appointed a
committee of Reforms in insurance sector with Shri. R.N.
Malhotra, a former governor of Reserve Bank Government
of India in January [Link] accordance with the
recommendations of the committee, the government set up
a regulatory body known as “Insurance Regulatory and
Development Authority” and enacted the Act known as
Insurance Regulatory and Development Act, 1999.
IRDA consists of:
i. A chairman
ii. Not more than 5 whole time members
iii. Not more than 4 part time members to be
appointed by central government.
MISSION STATEMENT OF IRDA
To protect the interest of and secure fair treatment
to policyholders.
To bring about speedy and orderly growth
To set, promote monitor , and enforce high
standards of integrity.
To take actions where standards are inadequate or
ineffectively enforced.
To ensure speedy settlement of insured claims.
OBJECTIVES OF IRDA
i. Take care of the policyholders interest.
ii. Open the insurance sector for private sector.
iii. Ensure continued financial soundness and solvency.
iv. Regulate insurance and reinsurance companies.
v. Eliminate dishonesty and unhealthy competition.
vi. Supervise the activities of intermediaries.
vii. Amend the insurance act 1938 ,the Life Insurance
Corporation Act1956, and the General Business
Act1972.
FUNCTIONS, DUTIES & POWER OF IRDA
To issue certificate of registration.
To protect the interests of the policyholders.
To specify requisite qualifications code of
conduct and training for insurance
intermediaries and agents.
To specify code of conduct for Surveyors/
Loss Assessors.
Functions Cont...
To promote efficiency in the conduct of
insurance business.
To supervise the functioning of Tariff
Advisory Committee.
To regulate investment of funds by the
insurance companies.
To undertake inspection, conduct enquiries and
investigations.
Functions Cont…
To specify the percentage of Life and
General Insurance business.
To promote and regulate professional
organizations connected with the
insurance and reinsurance.
To specify the form and manner for
maintenance of books of accounts.
Functions Cont…
To prescribe the manner and form in
which accounts will be maintained
and submitted by insurers and
intermediaries.
To regulate maintenance of margin of
solvency.
To levy fees & other charges for carrying out the
purposes of this act.
To adjudication of disputes between insurers &
intermediaries or insurance intermediaries.
To specify the percentage of premium income of
the insurer financial schemes for promoting &
regulating professional organization.
LAWS AND REGULATIONS
Insurance Act, 1938
Life Insurance Corporation Act, 1956
Insurance Regulatory and Development
Authority Act,1999
Consumer Protection Act, 1986
Ombudsman
Income Tax Act
Marriage Women’s Property Act, 1874
INSURANCE ACT, 1938
The Insurance Act,1938 came into effect from 1 st July 1939, and was
amended in1950 and in 1999.
It has the following provisions:
Licensing of agents and their remunerations
Probhition of rebates
Protection of policyholder’s interests
Placing the limits on the expenses of insurers use of funds and patterns of
investments
Maintaining solvency levels
Insurance Act Cont…
• Constitution of Insurance Association and Insurance Councils
and the Tariff Advisory Committee for General Insurance
Till 1999 the Controller of Insurance was responsible for the
administration of Insurance Act.
Since 1999, the IRDA has replaced the Controller of
Insurance. The Insurance Act vests the IRDA powers to:
Register insurance companies and also cancel their
registrations
Insurance Act Cont…
Monitor and certify the soundness of the terms of
life insurance business.
Make regulation relating to the conduct of the
business of insurance.
Inspect documents of insurer
Appoint additional directors
Issue directions
Takeover the management of an insurer and
appoint administrators.
Insurance Act Cont…
Adjudicate on disputes between insurers and
intermediaries or between intermediaries.
Decide on disputes relating to settlement of
claims of amounts not exceeding Rs.2000.
By the end of December 2006, the IRDA had
issued more than 25 regulations and also issued
several guidelines to insurers on a variety of
matters.
LIFE INSURANCE ACT,1956
Basis for the establishment of LIC:
Members- not more than 16.
One of them being chairman, appointed by Central
Government.
Section 30 gave LIC exclusive privilege to transact
life insurance business in India and ceased as a result
of the amendments made in 1999.
16 insurance companies were registered and had
commenced life insurance business till 31.8.2007
IRDA ACT, 1999
IRDA is a corporate body which is passed in December
1999
It was established
a) to protect the interests to holders of insurance policies,
b) to regulate, promote and ensure orderly growth of the
insurance industry.
It also sought to amend
a) the Insurance Act 1938,
b) the Life Insurance Corporation Act 1956,
c) the General Insurance Business Act,1972.
IRDA Act Cont…
Members –not more than 25
It replaces the ‘Controller of Insurance’ to
administer the provisions of Insurance Act.
It includes:
a) Registration
b) Licensing
c) Laying down regulations
for proper conduct of business.
CONSUMER PROTECTION ACT,1986
A consumer can approach the various forums
prescribed under the act for redress, in case he is
not satisfied with the goods and services
provided.
Consumer redress forums are established in each
district in each state.
Consumer Protection Cont…
complaints upto the value of
At district level-Rs. 20 lakh
At state level-Rs. 1 crore
The national commission will attend matters
beyond state level.
OMBUDSMAN
The governing body of the insurance council is
authorized by law to appoint ombudsman for the
insurance industry.
Not a judicial authority
Function-
to resolve complaints.
Acts as counsel and mediator in matters
Complaints may relate to:
a) Partial or total repudiation of claims
b) Any dispute regarding premium paid or payable
Ombudsman Cont…
Any dispute on legal construction related to
claims
Delay settlement of claims
Non-issue of any insurance documents to
customers after receipts of premium.
HOW OMBUDSMAN DEALS WITH COMPLAINTS
A complain can be made within one year after the insurer had
rejected the representations.
Expected to make the recommendation within one month
from the date of receipt of complains
Accepted-the insurer has to comply within 15 days.
Not accepted:
it will pass a award in writing stated the amount awarded.
Award has to be pass within 3 months.
intimate acceptance-should be within one month by a letter of
acceptance to the insurer.
Not intimate the acceptance- award cannot be implemented.
INCOME TAX ACT 1961
relief from income tax liabilities
Sum received under a life insurance policy exempted from
income tax subjected to the premium not more than 20% of
SA.
The income of the assesses is reduced by aggregate amounts
paid towards insurance premiums , up to max. Rs. 1 lakh.
Commuted values of pensions are exempt from income tax.
The wealth tax exempts life insurance policies:
Premium more than 10 years or more
Less than 10 years- proportionate value is deducted.
MARRIED WOMEN’S PROPERTY ACT, 1874
Section 6 of this act provides that a policy of
insurance effected by any married man on his
own life and expressed on the face of it for the
benefit of his wife and children, shall be
deemed to be a trust for the benefit of his
children and shall not be subject to control the
life assured or his creditors or form part of his
estate.
PROCEDURE Of ISSUE OR RENEWAL OF
LICENSE BY IRDA
Application through designate person.
Fees payable by the applicant to
the Authority.
Designated Person Grant or Renew
Yes
Delay
No
If delayed within 60
License is Granted or Reason for days of receipt of the
Renewed within period refusing application, inform the
of 3 Months applicant for reason.
Qualifications of the applicant
Population 5,000 or Any other place
more
Pass in 12th Std. or Pass in 10th Std. or
equivalent examination. equivalent examination.
