ANILA. Y ACHYUTH REDDY SOMASHEKAR. E V.

KARTIK RAGHURAM PRANAV SRIVASTAVA

AGENDA
        

INTRODUCTION COMPOSITION OBJECTIVES DUTIES & FUNCTIONS REGISTRATION CANCELLATION OF REGISTRATION INVESTMENT LICENSING OF INSURANCE AGENTS PENALTIES

INTRODUCTION


In 1993 Government has 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.

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

OBJECTIVES
1.

To protect the interest of and secure fair treatment to policyholders. 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. To set, promote, monitor and enforce high standards of integrity, financial soundness, fair dealing and competence of those it regulates. 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.

2.

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4.

Contd.
5.

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. To take action where such standards are inadequate or ineffectively enforced. To bring about optimum amount of self-regulation in day to day working of the industry consistent with the requirements of prudential regulation

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8.

DUTIES, POWERS AND FUNCTIONS OF IRDA



To regulate, promote and ensure orderly growth of the insurance business and re-insurance business. Issue of certificates to the applicant. Protection of the interests of the policy holders.

Contd.


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. Calling for information from, undertaking inspection of, conducting enquiries and investigations including audit of the insurers, intermediaries.

Contd.


Specifying norms for books of accounts. Regulating investment of funds by insurance companies. Regulating maintenance of margin of solvency

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 statement of deposits with the Reserve Bank of India.  For life business , a sum equivalent to 1%of total gross premium not exceeding 10crore written in India in any Financial year.  For General business 3%of total gross premium not exceeding 10 crore.

Contd.


Reinsurance business Rs.20 crore;Rs.100,000. For cooperative life insurance business / assurance companies should be Rs.2 lakh. A declaration verified by an affidavit by the principal officer of the insurer that the requirement of paid up capital (Rs. 100 crore and Rs.200 crore for life/general and reinsurance business, respectively) Rs. 250 crore for reinsurance business or working capital. A certified copy of the Published prospectus if any .

Contd.


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. 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.

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. He defaults in complying with or contravenes any requirement of insurance act/any rule/order made or direction issued there under,

Contd.


 

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, 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

INVESTMENT
Assets of insurer should be invested as


25% in Government securities (including deposit in RBI), At least 25% in Government/other approved securities; Up to 15% of the controlled fund of the insurers can be invested in other insurance; Up to 25% of the assets of GIC can be invested in other investment; No fund of policy holder can be invested outside India.

INSURANCE BUSINESS IN RURAL/SOCIAL SECTOR

For all new life insurer:-( percentage of total insurance) First year-7% Second year-9% Third year-12% Fourth year-14% Fifth year-16% Sixth year-18%

Contd.
For general insurer  First year- 2%  Second year- 3%  Third year- 5%  Fourth year-5% so on All insurers are obliged to issue 5,7,10,15,20,and 25 thousand lives in first six years respectively.

LICENSING OF INSURANCE AGENTS



An insurance agent is a licensed agent with IRDA. For getting license an agent has to pay Rs.250 Eligibility:- The agent should not be -Minor -Unsound mind -Guilty of criminal misappropriation/breach of trust/forgery Have not been found in the course of : -Any judicial proceeding relating to any insurance policy/winding up of an insurance company -Guilty of knowingly participated in committing fraud/dishonesty/misrepresentation against an insurer/insured

Contd.
An agent should  Possess requisite qualification and practical training not exceeding 12 months  Passed examination by IRDA  Not violated code of conduct as specified by IRDA.  If any individual who act as an agent sans a license and the insurer who appoints so would be punishable with a fine of up toRs.500and Rs.1000 respectively.

PENALTIES
Default in compliance with/Act in Contravention Furnish all report to IRDA Comply with its direction Maintain solvency margin Comply with the directions on insurance Penalty up to Rs.5lakh for each failure Carrying on business in contravention of requirement of registration and deposits if not then fine up to Rs.5lakh. False statement in document

Contd.


  

Manner and condition of investment Fine up to Rs.5lakh for each failure. Wrongfully obtaining/withhold property fine up to Rs.2lakh Offence by companies Failure to comply with provision of insurance act in the social/rural sector invite a penalty of up to Rs.25 lakh for each failure and imprisonment up to 3years or both.

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