INSURANCE REGULATORY AND DEVELOPMENT AUTHORITY:CASE

LAWS

Submitted by: SUMAN BEHERA

Semester: 5 t h
Regd no. - 1941801060
HISTORY
◦ The IRDA Act, 1999 was passed as per the major recommendation of the
Malhotra Committee report(1994) which recommended establishment of an
independent regulatory authority for insurance sector in India.
◦ Later it was incorporated as a statutory body in April 2000.
◦ The IRDA Act,1999 also allows private players to enter the insurance sector in
India besides a maximum foreign equity of 26 per cent in a private insurance
company having operation in India.
INTRODUCTION
◦ Insurance regulatory and development authority (IRDA) is the regulatory body in India that
governs both Life insurance and General insurance companies. India is a vast country that
offers great opportunities to varied segments one of which is the insurance sector.
◦ An act to provide for the establishment of an authority to protect the interest of holders of
insurance policies, to regulate, promote and ensure orderly growth of the insurance industry.
What is the purpose of IRDA.
◦ Insurance in India dates back to the year 1850 with the first General Insurance
company established in Calcutta. Soon, with the passage of years the market
became competitive as many insurers started emerging both in life and non-life
sectors.
◦ Realizing the fact, the Government of India to protect the interest of customers
established an independent regulatory body called IRDA.Now, new demands
have rolled in several insurance products are flooded in the market because
IRDA monitors the development and other insurance-related activities
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.
FUNCITON
◦ Screening 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 RESPONSIBLITIES
◦ 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 policyholders, 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.
DUTIES AND RESPONSIBLITIES
◦ 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.
CASE STUDY
A complaint lodged by Ms Kunti Devi, was received by IRDA on 14th April, 2009 regarding non receipt of
death claims. The complaint was forwarded to the Life Insurer on 28/07/2009.
The Life Insurer vide its letter dated February 05, 2010 informed the repudiation of the death claim due to
non disclosure of ‘material facts’ which was material to disclose. From the submissions of the life insurer it
is noticed that the claim was repudiated after a gap of around 12 months from the date of receipt of claim
intimation.
An investigation carried out by IRDA on 18th June, 2010 revealed that the time line adhered by the life
insurer to decide on the death claim is on a higher side. It was also noticed during the course of
investigation that more than 6 months was elapsed in respect of a few more individual death claim cases
without deciding the admissibility of the death claims and in respect of a group insurance policy one claim
is outstanding for more than one year.
DECISION
Wherever delays have taken place in taking decisions on the settlement of death claims, it is
considered that the Insurer has failed to adhere to the within referred regulations. The violation
of the referred regulations invites a penalty under Section 102(B) of the Insurance Act 1938 and
the Authority is empowered to impose a penalty not exceeding Rs.5 lakh for each such violation
and punishable with fine. Considering the nature of the violation, the Authority has come to the
conclusion that it is just and proper to impose a penalty of Rs.5 lakh. Accordingly, a penalty of
Rs 5 lakhs is imposed on the HDFC Standard Life Insurance Co Ltd.
The Life Insurer is also directed to put in place effective claim settlement procedures and take
all such measures that deem fit for both pro-active and timely settlement of all types of claims.
The procedures and measures shall fully comply with the regulations referred above. The Life
Insurer shall confirm the action taken towards this direction within 15 days from the date of
receipt of this order.
Thank you!!!