CB Life Insurance Company LTD

CB CB
Life Insurance Company Ltd.
Learning Outcomes
1. Be Familiar with the Indian Insurance Market

2. Learn about the Role of Intermediaries
3. Learn about the Role of Specialists
4. Learn about the Role of the Regulator and Other Bodies
Page 2 CB Life Insurance Company Ltd.
CB CB Life Insurance Company Ltd.
1. Be Familiar with the Indian Insurance Market (1)
Constituents of the insurance market are as follow:
Companies
General
Life Insurance Re-Insurance
Insurance
Intermediaries
Individual Corporate Marketing Web

Banks Brokers
Agents Agents Firms Aggregators
Specialists
Loss Medical
TPA Surveyors
Assessors Examiners
Regulatory
Bodies
IRDAI Insurance Council Ombudsman
Educational
Institutions
III NIA
Total Companies as of March 2016 in India
Insurance Companies 1 1
5
• Before 1999, Life Insurance Corporation of India

(LIC) & General Insurance Corporation of India
(GIC) have the exclusive privilege to transact
24
insurance business in India.
• Insurance Act 1938 was amended in 1999 to

provide registration of private insurers to
transact insurance business in India. 22
• IRDAI allows 26% for foreign direct investment

(FDI) for joint ventures with domestic/ local
insurers.
Life Insurers General Insurers
• March 2015, FDI 49% is still approving. Health Insurers Agricultural Insurance Company
Export Credit and Gurantee Corporation
Insurance Companies
• GIC is national re-insurer in India.
• ALL insurers are obliged to reinsure a certain portion of their Indian

business with GIC.
• LIC & GIC are owned by Central Government and established by

Parliament and incorporated under Indian Companies Act.
• Export Credit & Guarantee Insurance Company Limited is a

specialized insurer for risks related to export credit.
• Postal Life Assurance is run by Government and it is outside the

purview of IRDAI and Insurance Act.
2. Learn about the Roles of Intermediaries (1)
No. Intermediaries Functions of intermediaries

1. Brokers • An individual, company, society, a firm wholly engaged in sourcing
insurance business for various insurance companies
• Independent (not appointed/hired by any insurance company)
• Need License from IRDAI
• Professional
• Pass prescribed exam and go through prescribed training
• Invest minimum prescribed capital of Rupees 50 lakhs for direct
broker
• (Place business with primary insurers)
• Invest minimum prescribed capital of Rupees 200 lakhs for
reinsurance
• Invest minimum prescribed capital of Rupees 250 lakhs for composite
broker
• Remunerated by Brokerage which is regulated by IRDAI
• Do big businesses
• Advice customers on best insurance arrangements
• Negotiate with insurers to obtain best insurance terms for their clients
No. Intermediaries Functions of intermediaries

2. Agents • Need separate license
• Pass 10th standard
• At least 25 hours of insurance training
• Pass pre-recruitment test
• 3 years of license validity
• Individuals, corporate bodies like banks, companies, cooperative societies can be agents
3. Corporate Agents • An employee of a corporate agent
• Pass 12th standard
• At least 50 hours of insurance training
• Pass pre-recruitment test
4. Web Aggregators • Functions of web aggregators
• Display information pertaining to insurers
• Carry out activities for lead generation for insurers
• Compliance with Generally Accepted Information Security Standards And Procedures
1. Information systems (hardware & software)
2. Aggregation website/portal
3. Lead management system
4. Data center hosting website/portal
• Transmission of leads and other data to insurers using secured layer data encryption
technologies (128 bit encryption)
Page 10
• Collection and transfer of premium to insurers through Reserve Bank of India (RBI)
CB Life Insurance Company Ltd.
Web Aggregators
On December 3rd 2013, IRDAI approved the distribution channel for Web Aggregators
• Collect
• Compile
• Present
Information about insurance policies of various insurers from various sources and data bases such as
company websites to any potential insurance buyers.
• Include the word “insurance web aggregator” or “insurance web aggregators” in the name
Remuneration of web aggregators

• Flat fee of maximum Rupee 50,000 per year for each product displayed
• Reasonable service charges at the rates fixed at Service Level Agreement
• Remuneration for policies procured through telemarketing, distance marketing solution or outsourcing.
Insurance Marketing Firm (I.M.F)

 IMF can only canvas and procure the insurance business for 2 life insurers, 2 general
insurers, 2 health insurer at any point of time
 IMF must have “Insurance Marketing “ as part of its name
 IMF must maintain Rupees 10 lakhs at all times (minimum net worth)
 IMF must not undertake Multi-Level Marketing (MLM)
 IMF has 3 years for registration for 1 District only
 IMF can solicit & procure the insurance business from all over the world.
 IMF is allowed to open offices and recruit Insurance Sales Person (ISPS) domiciled in
district of registration.
 At renewal, IMF can apply for more than 1 District.
 IMF can be
1. A company formed under Companies Act 2013 or any other company law
2. A Limited Liability Partnership (LLP) formed and registered under Limited Liability
Partnership Act, 2008
3. Co-operative societies, registered under Co-operative Societies Act 1912.
4. Any other person recognized by IRDAI to act as IMF.
IMF Insurance
Servicing Activities
Undertake back-office activities of insurers
Act as an approved person of insurance repositories
Undertake survey and loss-assessment work by employing

the licensed surveyors and loss-assessors
Perform any other insurance related activity allowed by IRDAI
Point Of Sales Person (POS)

• Solicitation and marketing of
insurance products
• Very little underwriting and
minimal intervention
• 2 types of POS
1st Type – can solicit and market all

types of insurance policies
2nd Type – can solicit and market only
• Insurance agent
certain pre-underwritten products which
• specified persons of corporate agent
are simple plain vanilla type of products
• broker trained person
• Simple to understand
• Insurance sale persons of IMF
• Stated up-front clearly
• Rural Authorized persons of Common
• Fixed or pre-defined
service Centre (CSC)
• Approved by IRDAI
• Special Purpose Vehicle (SPV)
• Authorized person of web aggregators
3. Learn about the Roles of Specialists (1)
No. Specialists Functions of specialists

1. Surveyors • Assesses the loss
• A part of General Insurance business
• Justification/reason for loss assessment arises due to principle of indemnity
• No role in Life Insurance
• Has technical expertise
• Specialists in fields of finance, auto-mobiles, shipping, engineering, oil drilling,
metallurgy and other fields that insurers deal with
• Need to pass IRDAI prescribed exam and undergo practical training
• License is valid for 5 years
• Insurance Act requires a report from a licensed surveyor before
admitting/settling a claim
1. Claims that exceed Rupees 50,000 for Motor
2. Claims that exceed Rupees 100,000 for others in value
2. Examiners (ME) • ME are intermediaries whose help is sought to Examine and Certify the health
and insurability of the proposer
• Doctors are medical referees in life insurance underwriting.
• Cases of doubt are referred to ME
• ME help to decide if there is any room for suspicion, any suppression of
material facts
Third Party Administrators (TPA)

What TPA does
• Networking with hospitals
• Claim processing
• Claim settlement
• A specialized health service provider rendering
various services related to health insurance.
• Need TPA license from IRDAI
• Get paid by Insurance companies Benefits that TPA provides –
• TPA should have Insurers/Insurance companies
• Paid up capital of Rupee 4 crores • Reduction in costs
• Working capital of at least Rupee 1 crore • Reasonable treatment rates
(Difference between Aggregate of Current from hospitals
Assets & Current Liabilities) Customers/ Insured
• Its name should have the word “Insurance • Cash-less hospitalization
T.P.A” • Cash-less claim settlement
Insurance Repositories & Electronic Issuance of Insurance Policies

• IR is a company formed & registered under the Companies Act,1956
• IR has a certificate of registration by IRDAI for maintaining data of
insurance policies in electronic form on behalf of insurers
Main Objective of Insurance Repository

• To provide policyholders a facility to keep the insurance
policies in electronic form
• To undertake the changes, modifications and revisions in the
insurance policy with speed and accuracy.
• Act as a single stop for several policy-service requirements
• IR rings about efficiency and transparency in issuance and
maintenance of insurance policies
• CANNOT SELL or SOLICIT insurance policies
4. Learn about the Roles of the
Regulator and Other Bodies (1)
Insurance Regulatory and Development Authority of India (IRDAI)
Establishment • Established by the Act of Parliament in 1999
• IRDAI is a corporate body
• Its chairman and other IRDAI members are appointed by
Indian Government
Insurance • Has the authority to administer the Insurance Act 1938
Regulator • Regulate, promote, ensure the orderly growth of the insurance
industry
Licensing Authority • Has the authority to issue licenses to insurers, intermediaries
like agents, brokers, TPAs
Industry Watch Dog • Has the authority to issue regulations relevant to proper
functioning of the industry such as
• Adequacy of premium rates
• Limits on expenses
• Guidelines on investments
• Protection of policy-holders’ rights
• Solvency limits
• Can issue guide-lines and directions to insurance companies
that are to be followed by them on operational matters
Insurance Information Bureau of India (IIB)

• Previously known as Tariff Advisory Committee
• All insurers are mandated to provide all premium and
claims statistics to IIB
Insurance Councils • IIB is to provide key inputs to IRDAI (regulator) to help
• Constituted under Insurance Act 1938 and them in Policy Making.
afterwards under Insurance Laws • IIB also provides a bundle of services related to Motor
(Amendment) Act, 2015. Insurance to multiple stakeholders such as public, police,
• All insurers (GI & LI) are members of transport departments and insurers through its service
Insurance Council respectively. package titled v-seva
• Both GI and LI councils are self-regulatory • Its objective is to support the insurance industry
 Sector level data to enable
Data-based and scientific decision making such as
1. Pricing
2. Framing of business strategies
Insurance Ombudsman
It is of great importance and relevance for the protection of interests of policyholders
and in building their confidence in the system.
• Appointed for 3 years term
• Or till the incumbent attains 65 years whichever is earlier
• No reappointment
• Governing body has appointed total 17 ombudsmen across India
• It is not a judicial authority
• It has no right to summon witnesses
• 17 ombudsmen are appointed per their geographical areas for jurisdiction
• Established by Government of India in November 11th 1998
• Recommendations of appointment of Ombudsmen are made by a committee
 IRDAI Chairman
 LIC Chairman
 GIC Chairman
 Representative from Central Government
Function of Ombudsman
• To resolve complaints in respect of disputes
between policyholders and insurers in Cost-
Nature of Complaints to Ombudsman
Effective and Impartial manner
• Any partial or total repudiation of claims by the
• To ensure quick disposal of grievances of insured
insurance companies
customers
• Any dispute with regard to premium paid or
• To mitigate their problems involved in redressal
payable in terms of the policy
of grievances
• Any dispute on the legal construction of the policy
• To generate and sustain faith and confidence
wordings in case such dispute relates to claims
among the consumers and insurers
• Delay in settlement of claims
• To act as a counsel and mediator in matters
• Non-issuance of any insurance document to
within its terms of reference
customers after receipts of premium
• Ombudsman does not restrict, mitigate the
jurisdiction of the consumer forums set up under
Consumer Protection Act,1986.
Manner of lodging the complaint

 Complainant should make a representation to the insurer
named in complaint and the insurer
• The insurer Rejected the complaint
• The complainant receives no-reply within 1 month
• The complainant is not satisfied with the reply
 Complaint has to be made within 1 year
• After insurer rejected the representation
• After insurer replied un-satisfactorily
Award or recommendation of Ombudsman
 The ombudsman shall make the recommendation within a month from the date of
receipt of complaint.
 The complainant can accept or reject the recommendation.
 If he accepts the recommendation
• The insurer has to comply with the order within 15 days
• The insurer hast to inform the ombudsman accordingly
 If he does not accept the recommendation
• The ombudsman will pass an AWARD in writing
• The award will state the amount awarded
1. Award should not be in excess of what is necessary to cover the loss
suffered by the complainant as a direct consequence of the insured peril
2. For an amount not exceeding Rupees 20 Lakhs whichever is lower
3. Award has to be passed within 3 months
• The complainant has to intimate his acceptance of the award within 1 month by
letter of acceptance to the insurer.
• The insurer has to comply within 15 days and inform the ombudsman.
• Without intimation by complainant about the award, it cannot be implemented.
Educational Institutions
• Insurance is a specialized subject which is not taught in
normal educational institutions.
• Insurance Institute of India (III) was set up in Mumbai in 1955
• III was previously known as Federation of Insurance Institutes
• III offers licentiate, certificate, associateship diploma and
fellowship diploma.
• Credits are given by recognized institutes n UK and USA for
those who pass the exams.
• III conducts examinations in 19 centers in Asia, Africa and Fiji.
• College of Insurance established in Mumbai in 1966 is the
training wing of III
• National Insurance Academy established in Pune in 1982
offers short-duration courses on insurance related subjects.
• NIA offers 2 years’ post graduate diploma course in insurance.
Other Institutions
Institute of Actuaries of India • Formerly known as Actuarial Society of India
• Established in 1944
• Conduct exams for actuarial sciences in 1989
• Offers diplomas at fellowship level
Indian Institute of Insurance and Risk Management • Provides training and services in Risk
Management
Indian Institute of Surveyors and adjusters • Provides training and services in Surveys
Other Institutes • Since 2000, several universities and other
educational institutions start to offer insurance
education at graduate and post-graduate levels.

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1. Be Familiar with the Indian Insurance Market

Constituents of the insurance market are as follow:

Individual Corporate Marketing Web

IRDAI Insurance Council Ombudsman

Total Companies as of March 2016 in India

• Before 1999, Life Insurance Corporation of India

• Insurance Act 1938 was amended in 1999 to

• IRDAI allows 26% for foreign direct investment

• ALL insurers are obliged to reinsure a certain portion of their Indian

• LIC & GIC are owned by Central Government and established by

• Export Credit & Guarantee Insurance Company Limited is a

• Postal Life Assurance is run by Government and it is outside the

No. Intermediaries Functions of intermediaries

No. Intermediaries Functions of intermediaries

Remuneration of web aggregators

Insurance Marketing Firm (I.M.F)

Undertake back-office activities of insurers

Act as an approved person of insurance repositories

Undertake survey and loss-assessment work by employing

Perform any other insurance related activity allowed by IRDAI

Point Of Sales Person (POS)

1st Type – can solicit and market all

No. Specialists Functions of specialists

Third Party Administrators (TPA)

Insurance Repositories & Electronic Issuance of Insurance Policies

Main Objective of Insurance Repository

Insurance Information Bureau of India (IIB)

Manner of lodging the complaint

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