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INSURANCE REGULATORY AND

DEVELOPMENT AUTHORITY (IRDA)


INTRODUCTION
The passage of the insurance regulatory and
development authority act in 1999 can be seen as a
dividing line for insurance business in INDIA. It was an
outcome of the implementation of the recommendations
of a high-powered committee, which suggested the
setting up of a statutory body called INSURANCE
REGULATORY AUTHORITY in 1996.This body was
later renamed as as insurance regulatory and
development authority with the passage of IRDA ACT
BY THE PARLIAMENT.
MISSION STATEMENT

"TO PROTECT THE INTERESTS OF THE


POLICYHOLDERS, TO REGULATE, PROMOTE AND
ENSURE ORDERLY GROWTH OF THE INSURANCE
INDUSTRY AND FOR MATTERS CONNECTED
THEREWITH OR INCIDENTAL THERETO. "
MAJOR OBJECTIVES OF THE IRDA act
 To promote orderly growth of insurance industry in the
country, including registration of the insurance companies
 To administer the provisions of the insurance act
 To protect interests of policy holders and investors
 To device control activities needed for smooth functioning
of the insurance companies including investment of funds
and the solvency requirements to be maintained by
insurance companies
 To lay down the accounting methodology to be adopted
 To adjudicate on disputes
FUNCTIONS OF IRDA
 As defined by the IRDA act,1999,IRDA performs the following
broad functions:
 Ensure orderly growth of the insurance industry
 Protect interest of policy holder
 Issue consumer protection guidelines to insurance companies
 Grant modify, and suspend license for insurance companies
 Lay down procedures for accounting polices to be adopted by the
insurance companies
 Inspect and audit of insurance companies and other related
agencies
 Re-insurance limit monitoring
FUNCTION CONTINUES

 Vetting of accounting standards, transparency requirements


in reporting
 Ensure the health of the industry by preventing sickness
through appropriate action
 Publish information about the industry
 Prescribe qualification and training needs of agents
 Monitor the charges for various services by insurance
company
 Monitor investment
DUTIES AND RESPONSIBILITIES OF
IRDA SECTION 14 OF IRDA ACT, 1999
 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
DoUTIES AND RESPONSIBLITIES OF
IRDA
 specifying the code of conduct for surveyors and loss
assessors;
 promoting efficiency in the conduct of insurance business;
 promoting and regulating professional organizations
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 organizations connected with the insurance business;
STIPULATIONS AS REGARDS
SETTLEMENT OF CLAIM
 IRDA regulations has laid down the followingstipulations
as regards of settlement of claim:
 All the requirements needed under death claim are to be
sought in one instance
 Admit or repudiate the claim in 30 days
 All the investigations needed to be completed in 6
months
 Interest at 2% over banks rate is payable in case of
delayed settlement
COMPOSITION OF AUTHORITY

 As per the section 4 of IRDA Act' 1999, Insurance


Regulatory and Development Authority (IRDA, which was
constituted by an act of parliament) specify the composition
of Authority
The Authority is a ten member team consisting of

(a) a Chairman;
(b) five whole-time members;
(c) four part-time members,
(all appointed by the Government of India)
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".
(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 or be sued.
INCORPORATION OF AUTHORITY

(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.
TENURE OF OFFICE OF 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.
TENURE OF OFFICE OF MEMBERS

(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
OMBUDSMAN
The institution of Insurance Ombudsman was created
by a Government of India Notification dated 11th
November, 1998 with the purpose of quick disposal of
the grievances of the insured customers and to mitigate
their problems involved in redressal of those
grievances. This institution is of great importance and
relevance for the protection of interests of policy
holders and also in building their confidence in the
system. The institution has helped to generate and
sustain the faith and confidence amongst the consumers
and insurers.
APPOINTMENT OF OMBUDSMAN
The governing body of insurance council issues orders
of appointment of the insurance Ombudsman on the
recommendations of the committee comprising of
Chairman, IRDA, Chairman, LIC, Chairman, GIC and a
representative of the Central Government. Insurance
council comprises of members of the Life Insurance
council and general insurance council formed under
Section 40 C of the Insurance Act, 1938. The governing
body of insurance council consists of representatives of
insurance companies.
POWER OF OMBUDSMAN

Insurance Ombudsman has two types of functions to


perform (1) conciliation, (2) Award making. The
insurance Ombudsman is empowered to receive and
consider complaints in respect of personal lines of
insurance from any person who has any grievance
against an insurer. The complaint may relate to any
grievance against the insurer i.e. (a) any partial or total
repudiation of claims by the insurance companies,
POWER OF OMBUDSMAN

(b) dispute with regard to premium paid or payable in


terms of the policy, (c) dispute on the legal construction
of the policy wordings in case such dispute relates to
claims; (d) delay in settlement of claims and (e) non-
issuance of any insurance document to customers after
receipt of premium
CONSTITUTION OF FUNDS
(1) There shall be constituted a fund to be called "the
Insurance Regulatory and Development Authority
Fund" and there shall be credited thereto-
(a)all Government grants, fees and charges received by
the Authority;
(b)all sums received by the Authority from such other
source as may be decided upon by the Central
Government;
(c)the percentage of prescribed premium income
received from the insurer.
CONSTITUTION OF FUNDS

(2) The Fund shall be applied for meeting -


(a)the salaries, allowances and other remuneration of
the members, officers and other employees of the
Authority;
(b)the other expenses of the Authority in connection
with the discharge of its functions and for the purposes
of this Act.
CLAIMS DOCUMENT

i.Insurance Policy
ii. Claim form
iii. FIR, Fire Brigade Report
iv.Accounting statements like past 3 years Balance
Sheets, Stock Registers, Purchase and Sales invoices,
Sales tax returns, Excise duty records, Profit and Loss
accounts etc.
v.Act of God Perils - newspaper cuttings, photographs
and meteorological reports
CLAIMS DOCUMENT

vi. If company proposes to settle the claim then Letter


of subrogation (substitution), the discharge voucher, if
the policy is subject to Agreed Bank Clause (if Bank's
or other Financial Institution's interest is involved, the
discharge voucher has to be signed by their authorised
signatories).
THANK YOU