Insurance & IRDA

History of insurance
The history of general insurance dates back to the Industrial Revolution in the
west and the consequent growth of sea-faring trade and commerce in the 17
th
century. It came to India as a legacy of British occuation. !eneral Insurance in
India has its roots in the establishment of Triton Insurance "omany #td.$ in the
year 1%&' in "alcutta by the British. In 1('7$ the Indian )ercantile Insurance
#td$ was set u. This was the first comany to transact all classes of general
insurance business.
1(&7 saw the formation of the !eneral Insurance "ouncil$ a wing of the
Insurance *ssociaton of India. The !eneral Insurance "ouncil framed a code of
conduct for ensuring fair conduct and sound business ractices.
1%1% saw the advent of life insurance business in India with the establishment
of the +riental #ife Insurance "omany in "alcutta. This "omany however
failed in 1%,-. In 1%.($ the )adras /quitable had begun transacting life
insurance business in the )adras 0residency. 1%7' saw the enactment of the
British Insurance *ct and in the last three decades of the nineteenth century$ the
Bombay )utual 11%712$ +riental 11%7-2 and /mire of India 11%(72 were
started in the Bombay Residency. This era$ however$ was dominated by foreign
insurance offices which did good business in India$ namely *lbert #ife
*ssurance$ Royal Insurance$ #iverool and #ondon !lobe Insurance and the
Indian offices were u for hard cometition from the foreign comanies.
Meaning of insurance
In law and economics$ insurance is a form of risk management rimarily used to
hedge against the risk of a contingent$ uncertain loss. Insurance is defined as the
equitable transfer of the risk of a loss$ from one entity to another$ in e3change
age 1
Insurance & IRDA
for ayment. *n insurer is a comany selling the insurance4 an insured$ or
olicyholder$ is the erson or entity buying the insurance olicy. The insurance
rate is a factor used to determine the amount to be charged for a certain amount
of insurance coverage$ called the remium. Risk management$ the ractice of
araising and controlling risk$ has evolved as a discrete field of study and
ractice.
Insurance involves ooling funds from many insured entities 1known as
e3osures2 to ay for the losses that some may incur. The insured entities are
therefore rotected from risk for a fee$ with the fee being deendent uon the
frequency and severity of the event occurring. In order to be insurable$ the risk
insured against must meet certain characteristics in order to be an insurable risk.
Insurance is a commercial enterrise and a ma5or art of the financial services
industry$ but individual entities can also self-insure through saving money for
ossible future losses.
617
The business model is to collect more in remium and investment income than
is aid out in losses$ and to also offer a cometitive rice which consumers will
accet. 0rofit can be reduced to a simle equation8 0rofit 9 earned remium :
investment income - incurred loss - underwriting e3enses.
Insurers make money in two ways8
1. Through underwriting$ the rocess by which insurers select the risks to
insure and decide how much in remiums to charge for acceting those
risks4
.. By investing the remiums they collect from insured arties.
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Insurance & IRDA
;on termination of a given olicy$ the amount of remium collected and the
investment gains thereon$ minus the amount aid out in claims$ is the insurer<s
underwriting rofit on that olicy. ;nderwriting erformance is measured by
something called the =combined ratio=
6(7
which is the ratio of e3enses>losses to
remiums. * combined ratio of less than 1'' ercent indicates an underwriting
rofit$ while anything over 1'' indicates an underwriting loss. * comany with
a combined ratio over 1''? may nevertheless remain rofitable due to
investment earnings.
"laims and loss handling is the materiali@ed utility of insurance4 it is the actual
=roduct= aid for. "laims may be filed by insureds directly with the insurer or
through brokers or agents. The insurer may require that the claim be filed on its
own rorietary forms$ or may accet claims on a standard industry form$ such
as those roduced by *"+RA.
Insurance comany claims deartments emloy a large number of claims
ad5usters suorted by a staff of records management and data entry clerks.
Incoming claims are classified based on severity and are assigned to ad5usters
whose settlement authority varies with their knowledge and e3erience. The
ad5uster undertakes an investigation of each claim$ usually in close cooeration
with the insured$ determines if coverage is available under the terms of the
insurance contract$ and if so$ the reasonable monetary value of the claim$ and
authori@es ayment.
The olicyholder may hire their own ublic ad5uster to negotiate the settlement
with the insurance comany on their behalf. Bor olicies that are comlicated$
where claims may be comle3$ the insured may take out a searate insurance
olicy add on$ called loss recovery insurance$ which covers the cost of a ublic
ad5uster in the case of a claim.
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Insurance & IRDA
*d5usting liability insurance claims is articularly difficult because there is a
third arty involved$ the laintiff$ who is under no contractual obligation to
cooerate with the insurer and may in fact regard the insurer as a dee ocket.
The ad5uster must obtain legal counsel for the insured 1either inside =house=
counsel or outside =anel= counsel2$ monitor litigation that may take years to
comlete$ and aear in erson or over the telehone with settlement authority
at a mandatory settlement conference when requested by the 5udge.
If a claims ad5uster susects under-insurance$ the condition of average may
come into lay to limit the insurance comany<s e3osure.
In managing the claims handling function$ insurers seek to balance the elements
of customer satisfaction$ administrative handling e3enses$ and claims
overayment leakages. *s art of this balancing act$ fraudulent insurance
ractices are a ma5or business risk that must be managed and overcome.
Aisutes between insurers and insureds over the validity of claims or claims
handling ractices occasionally escalate into litigation 1see insurance bad faith2.
Types of insurance
Auto insurance
*uto insurance rotects the olicyholder against financial loss in the event of an
incident involving a vehicle they own$ such as in a traffic collision.
"overage tyically includes8
1. 0roerty coverage$ for damage to or theft of the car4
.. #iability coverage$ for the legal resonsibility to others for bodily in5ury
or roerty damage4
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Insurance & IRDA
,. )edical coverage$ for the cost of treating in5uries$ rehabilitation and
sometimes lost wages and funeral e3enses.
Home insurance
Come insurance rovides coverage for damage or destruction of the
olicyholder<s home. In some geograhical areas$ the olicy may e3clude
certain tyes of risks$ such as flood or earthquake$ that require additional
coverage. )aintenance-related issues are tyically the homeowner<s
resonsibility. The olicy may include inventory$ or this can be bought as a
searate olicy$ esecially for eole who rent housing. In some countries$
insurers offer a ackage which may include liability and legal resonsibility for
in5uries and roerty damage caused by members of the household$ including
ets.
Health insurance
Cealth insurance olicies cover the cost of medical treatments. Aental
insurance$ like medical insurance rotects olicyholders for dental costs. In the
;D and "anada$ dental insurance is often art of an emloyer<s benefits
ackage$ along with health insurance.
*ccident$ sickness and unemloyment insurance
Eorkers< comensation$ or emloyers< liability insurance$ is comulsory in
some countries
Aisability insurance
#ong-term disability insurance
Aisability overhead insurance
Total ermanent disability insurance
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Insurance & IRDA
Eorkers< comensation insurance
Casualty insurance
"asualty insurance insures against accidents$ not necessarily tied to any secific
roerty. It is a broad sectrum of insurance that a number of other tyes of
insurance could be classified$ such as auto$ workers comensation$ and some
liability insurances.
Life insurance
#ife insurance rovides a monetary benefit to a decedent<s family or other
designated beneficiary$ and may secifically rovide for income to an insured
erson<s family$ burial$ funeral and other final e3enses. #ife insurance olicies
often allow the otion of having the roceeds aid to the beneficiary either in a
lum sum cash ayment or an annuity.
*nnuities rovide a stream of ayments and are generally classified as
insurance because they are issued by insurance comanies$ are regulated as
insurance$ and require the same kinds of actuarial and investment management
e3ertise that life insurance requires. *nnuities and ensions that ay a benefit
for life are sometimes regarded as insurance against the ossibility that a retiree
will outlive his or her financial resources. In that sense$ they are the
comlement of life insurance and$ from an underwriting ersective$ are the
mirror image of life insurance.
"ertain life insurance contracts accumulate cash values$ which may be taken by
the insured if the olicy is surrendered or which may be borrowed against.
Dome olicies$ such as annuities and endowment olicies$ are financial
instruments to accumulate or liquidate wealth when it is needed.
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Insurance & IRDA
In many countries$ such as the ;D and the ;F$ the ta3 law rovides that the
interest on this cash value is not ta3able under certain circumstances. This leads
to widesread use of life insurance as a ta3-efficient method of saving as well as
rotection in the event of early death.
In the ;D$ the ta3 on interest income on life insurance olicies and annuities is
generally deferred. Cowever$ in some cases the benefit derived from ta3 deferral
may be offset by a low return. This deends uon the insuring comany$ the
tye of olicy and other variables 1mortality$ market return$ etc.2. )oreover$
other income ta3 saving vehicles 1e.g.$ IR*s$ -'11k2 lans$ Roth IR*s2 may be
better alternatives for value accumulation.
Property insurance
This tornado damage to an Illinois home would be considered an =*ct of !od=
for insurance uroses
0roerty insurance rovides rotection against risks to roerty$ such as fire$
theft or weather damage. This may include seciali@ed forms of insurance such
as fire insurance$ flood insurance$ earthquake insurance$ home insurance$ inland
marine insurance or boiler insurance.
IRAD1Insurance Regulatory and Aeveloment *uthority2
This millennium has seen insurance come a full circle in a 5ourney e3tending to
nearly .'' years. The rocess of re-oening of the sector had begun in the early
1(('s and the last decade and more has seen it been oened u substantially. In
1((,$ the !overnment set u a committee under the chairmanshi of RG
)alhotra$ former !overnor of RBI$ to roose recommendations for reforms in
the insurance sector.The ob5ective was to comlement the reforms initiated in
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Insurance & IRDA
the financial sector. The committee submitted its reort in 1((- wherein $
among other things$ it recommended that the rivate sector be ermitted to enter
the insurance industry. They stated that foreign comanies be allowed to enter
by floating Indian comanies$ referably a 5oint venture with Indian artners.

Bollowing the recommendations of the )alhotra "ommittee reort$ in 1((($
the Insurance Regulatory and Aeveloment *uthority 1IRA*2 was constituted
as an autonomous body to regulate and develo the insurance industry. The
IRA* was incororated as a statutory body in *ril$ .'''. The key ob5ectives of
the IRA* include romotion of cometition so as to enhance customer
satisfaction through increased consumer choice and lower remiums$ while
ensuring the financial security of the insurance market.

The IRA* oened u the market in *ugust .''' with the invitation for
alication for registrations. Boreign comanies were allowed ownershi of u
to .H?. The *uthority has the ower to frame regulations under Dection 11-*
of the Insurance *ct$ 1(,% and has from .''' onwards framed various
regulations ranging from registration of comanies for carrying on insurance
business to rotection of olicyholdersI interests.

In Aecember$ .'''$ the subsidiaries of the !eneral Insurance "ororation of
India were restructured as indeendent comanies and at the same time !I"
was converted into a national re-insurer. 0arliament assed a bill de-linking the
four subsidiaries from !I" in July$ .''..

Today there are .- general insurance comanies including the /"!" and
*griculture Insurance "ororation of India and ., life insurance comanies
oerating in the country.

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Insurance & IRDA
The insurance sector is a colossal one and is growing at a seedy rate of 1&-
.'?. Together with banking services$ insurance services add about 7? to the
countryIs !A0. * well-develoed and evolved insurance sector is a boon for
economic develoment as it rovides long- term funds for infrastructure
develoment at the same time strengthening the risk taking ability of the
country.
The Insurance Regulatory and Aeveloment *uthority 1IRA*2 is a national
agency of the !overnment of India$ based in Cyderabad. It was formed by an
act of Indian 0arliament known as IRA* *ct 1((($ which was amended in .''.
to incororate some emerging requirements. )ission of IRA* as stated in the
act is =to rotect the interests of the 0olicyholders$ to regulate$ romote and
ensure orderly growth of the Insurance industry and for matters connected
therewith or incidental thereto.=
In .'1'$ the !overnment of India ruled that the ;nit #inked Insurance 0lans
1;#I0s2 will be governed by IRA*$ and not the market regulator Decurities and
/3change Board of India
Duties,Powers and unctions of IRDA
Dection 1- of IRA* *ct$ 1((( laysdown the duties$owers and functions of
IRA*8
1. Dub5ect to the rovisions of this *ct and any other law for the time being in
force$ the *uthority shall have the duty to regulate$ romote and ensure
orderly growth of the insurance business and re-insurance business.
.. Eithout re5udice to the generality of the rovisions contained in sub-section
112$ the owers and functions of the *uthority shall include$
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Insurance & IRDA
1. issue to the alicant a certificate of registration$ renew$ modify$
withdraw$ susend or cancel such registration4
.. rotection of the interests of the olicy holders in matters concerning
assigning of olicy$ nomination by olicy holders$ insurable interest$
settlement of Insurance claim$ surrender value of olicy and other
terms and conditions of contracts of insurance4
,. secifying requisite qualifications$ code of conduct and ractical
training for intermediary or insurance intermediaries and agents4
-. secifying the code of conduct for surveyors and loss assessors4
&. romoting efficiency in the conduct of insurance business4
H. romoting and regulating rofessional organisations connected with the
insurance and re-insurance business4
7. levying fees and other charges for carrying out the uroses of this *ct4
%. calling for information from$ undertaking insection of$ conducting
enquiries and investigations including audit of the insurers$
intermediaries$ insurance intermediaries and other organisations
connected with the insurance business4
(. control and regulation of the rates$ advantages$ terms and conditions
that may be offered by insurers in resect of general insurance business
not so controlled and regulated by the Tariff *dvisory "ommittee
under section H-; of the Insurance *ct$ 1(,% 1- of 1(,%24
1'. secifying the form and manner in which books of account shall be
maintained and statement of accounts shall be rendered by insurers and
other insurance intermediaries4
11. regulating investment of funds by insurance comanies4
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Insurance & IRDA
1.. regulating maintenance of margin of solvency4
1,. ad5udication of disutes between insurers and intermediaries or
insurance intermediaries4
1-. suervising the functioning of the Tariff *dvisory "ommittee4
1&. secifying the ercentage of remium income of the insurer to finance
schemes for romoting and regulating rofessional organisations
referred to in clause 1f24
1H. secifying the ercentage of life insurance business and general
insurance business to be undertaken by the insurer in the rural or social
sector4 and
17. e3ercising such other owers as may be rescribed from time to time.
Ad!isory committee
IRA* consists of a "hairman and some ermanent as well as art time
members. The regulations$ however$ are enacted under the guidance of a
statutory advisory committee. The advisory committee consists of following
individuals and e3-officio authorities8
"hairman8 Cari Garayan J. is the current "hairman of IRA*.
Bull-time )embers8 "urrently$ they are )r ). Ramarasad 1Gonlife
)ember2$ Dri ! 0rabhakara 1#ife )ember2$ Ar R Fannan1)ember$
*ctuary2 and Dri R.F. Gair 1)ember$ B K I2. There is rovision for a
anel of other members and art time members. IRA* formed a high
owered Insurance #aw Reforms "ommittee known as F0G "ommittee
with imortant insurance advisors like )r G !ovardhan and Ar F "
)ishra as its members. There were also a few non-advisory committee
members like )r #iaquat Fhan and )r T Liswanathan etc.
age 11
Insurance & IRDA
Bull force and utility of various institutions like *dvisory "ommittee and self-
regulatory organi@ations are not yet reali@ed as the regulator seems to be in a
long learning mode. Aue to over delegations$ Individual incumbents decide the
ace and e3tent of utili@ation of rudential and statutory bodies. Research is
limited to oinion seeking through legacy channels. )arket waits for revision of
insurance act and establishment meaningfully functioning regulatory organs
devoid of e3cess delegation and sub5ective locali@ation of develoment
agencies.
IRA* Journal is available as soft coy in its website.
6.7
;nlike other Indian
administrative Regulatory *gencies IRA* is erceived as a silent regulator with
activities confined to its local e3istence.
Insurance Regulatory and Aeveloment *uthority 1IRA*2 in India consists a
"hairman and some ermanent and art time members in the administration.
Cowever$ the regulations are enacted under the guidance of a statutory advisory
committee.
IRDA regulates pri!ate insurance companies in India such as
M Royal Dundaram *lliance Insurance "omany #imited
M Reliance !eneral Insurance "omany #imited.
M IBB"+ Tokio !eneral Insurance "o. #td
M T*T* *I! !eneral Insurance "omany #td.
M Ba5a5 *llian@ !eneral Insurance "omany #imited
M I"I"I #ombard !eneral Insurance "omany #imited.
M *ollo AFL Insurance "omany #imited
M Buture !enerali India Insurance "omany #imited
M ;niversal Domo !eneral Insurance "omany #td.
M "holamandalam !eneral Insurance "omany #td.
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Insurance & IRDA
M /3ort "redit !uarantee "ororation #td.
M CAB"-"hubb !eneral Insurance "o. #td.
M Bharti *3a !eneral Insurance "omany #td.
M Rahe5a NB/ !eneral Insurance "o. #td.
M Dhriram !eneral Insurance "o. #td.
C"MP"#ITI"$ " A%TH"RIT& %$D'R IRDA ACT, ()))
*s er the section - of IRA* *ct< 1((($ Insurance Regulatory and
Aeveloment *uthority 1IRA*$ which was constituted by an act of arliament2
secify the comosition of *uthority
The *uthority is a ten member team consisting of
1a2 a "hairman4
1b2 five whole-time members4
1c2 four art-time members$
These all are aointed by the !overnment of India.
age 13
Insurance & IRDA
I$#%RA$C' R'*%LAT"R& A$D D'+'L"PM'$T A%TH"RIT&
The Insurance Regulatory and De!elopment Authority 1IRA*2 is a national
agency of the !overnment of India$ based in Cyderabad. It was formed by an
act of Indian 0arliament known as IRA* *ct 1((($ which was amended in .''.
to incororate some emerging requirements. )ission of IRA* as stated in the
act is =to rotect the interests of the olicyholders$ to regulate$ romote and
ensure orderly growth of the insurance industry and for matters connected
therewith or incidental thereto.=
In .'1'$ the !overnment of India ruled that the ;nit #inked Insurance 0lans
1;#I0s2 will be governed by IRA*$ and not the market regulator Decurities and
/3change Board of India
'sta,lishment of Insurance Ad!isory Committee 1section .&2
age 14
Insurance & IRDA
Composition of IRDA-
The IRA* consists of a chairerson and not more than nine members of
whom not more than five would be full-time members$ to be aointed by
the government from amongst ersons of ability$ integrity$ and standing who
have knowledge and e3erience of life insurance or general insurance or
actual services$ finance$ economics$ law$ accountancy$ administration or any
other disciline which in the oinion of the government would be useful to
it.
Issue of Direction-
The IRA* is bound by the direction of the government on question of
olicy other than those relating to techniques and administrative matters in
writing from time to time. The decision of the government weather a
question is one of olicy or not would be final.
#uppression-
The government may by notification and for secified reason suersede
the IRA* for a eriod not e3ceeding si3 months in circumstances secified
below and during the eriod of suression aointed a erson to act as the
"ontrollers of Insurance under the Insurance *ct$ 1(,%.
.a/ +n account of circumstances beyond its control$ the IRA* is unable to
discharge its functions.
.,/ 0ersistent default by it in comlying with any direction given by the
government under the IRA* *ct or in discharge of functions or duties
imosed on it by or under the rovisions of the *ct and as a result of
such default the financial osition of the IRA* has suffered.
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Insurance & IRDA
.c/ "ircumstances e3ist which render it necessary in ublic interest to do
so.
",0ecti!es
The otential for the growth and sread of life insurance in India is high
as in many other *shian countries. )ore then 7&? of IndiaIs insurance industry
requires a high degree of regulation. The Insurance *ct$ 1(,%$ rovides for the
institution of the "ontroller of Insurance to act as a strong and owerful
suervisory and regulatory authority. It has owers to direct$ advise caution$
rohibit$ investigate$ insect$ rosecute$ search$ sei@e$ fine$ amalgamate$
authori@e$ register and liquidate insurance comanies. Cowever$ the role of
"ontroller of Insurance diminashed over a eriod of time after the
nationalisation of life insurance in 1(&H and the general insurance in1(7..
The !overnment of India set u a high owered committee in 1((,$
headed by Dhri R. G. malhotra$ former !overnor$ RBI to e3amine the structure
age 16
Insurance & IRDA
of the insurance industry and recommend changes in other arts of the financial
system of the economy. The "ommittee submitted its reort on 7
th
January$
1((-$ felt that insurance regulatory aaratus should be activated even in the
resent set u of nationalised insurance sector and recommended the
establishment of a strong and effective Insurance Regulatory *uthority in the
form of a statutory autonomous board on the lines of the securities and
e3change board of India. The "ommittee also recommended oening u of
Insurance "omanies only .H? initially but it has been raised to -(? in .''-.
In 1((H$ interim Insurance Regulatory *uthority was formed and in 1((( the
IRA* Bill was assed in the 0arliament. The IRA* *ct rovides for the
establishment of an authority to rotect the interest of the holders of insurance
olicies$ to regulate$ to romote and ensure orderly growth of the insurance
industry.
'1pectations-
age 17
Insurance & IRDA
The law of India has following e3ectations from IRA*
1. To rotect the interest of and secure fair treatment to olicyholders.
.. To bring about seedy and orderly growth of the insurance industry
1including annuity and suerannuation ayments2$ for the benefit of the
common man$ and to rovide long term funds for accelerating growth of
the economy.
,. To set$ romote$ monitor and enforce high standards of integrity$ financial
soundness$ fair dealing and cometence of those it regulates.
-. To ensure that insurance customers receive recise$ clear and correct
information about roducts and services and make them aware of their
resonsibilities and duties in this regard.
&. To ensure seedy settlement of genuine claims$ to revent insurance
frauds and other malractices and ut in lace effective grievance
redressal machinery.
H. To romote fairness$ transarency 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 layers.
7. To take action where such standards are inadequate or ineffectively
enforced.
%. To bring about otimum amount of self-regulation in day to day working
of the industry consistent with the requirements of rudential regulation.
Duties, Powers and unctions of IRDA-
age 18
Insurance & IRDA
Dection 1- of IRA* *ct$ 1((( laysdown the duties$owers and functions of
IRA*
1. Dub5ect to the rovisions of this *ct and any other law for the time being
in force$ the *uthority shall have the duty to regulate$ romote and ensure
orderly growth of the insurance business and re-insurance business.
.. Eithout re5udice to the generality of the rovisions contained in sub-
section 112$ the owers and functions of the *uthority shall include$
1. issue to the alicant a certificate of registration$ renew$ modify$
withdraw$ susend or cancel such registration4
.. rotection of the interests of the olicy holders in matters
concerning assigning of olicy$ nomination by olicy holders$
insurable interest$ settlement of insurance claim$ surrender value of
olicy and other terms and conditions of contracts of insurance4
,. secifying requisite qualifications$ code of conduct and ractical
training for intermediary or insurance intermediaries and agents4
-. secifying the code of conduct for surveyors and loss assessors4
&. romoting efficiency in the conduct of insurance business4
H. romoting and regulating rofessional organisations connected
with the insurance and re-insurance business4
7. levying fees and other charges for carrying out the uroses of this
*ct4
%. calling for information from$ undertaking insection of$ conducting
enquiries and investigations including audit of the insurers$
intermediaries$ insurance intermediaries and other organi@ations
connected with the insurance business4
age 19
Insurance & IRDA
(. control and regulation of the rates$ advantages$ terms and
conditions that may be offered by insurers in resect of general
insurance business not so controlled and regulated by the Tariff
*dvisory "ommittee under section H-; of the Insurance *ct$ 1(,%
1- of 1(,%24 Decifying the form and manner in
which books of account shall be maintained and statement of
accounts shall be rendered by insurers and other insurance
intermediaries4
11. regulating investment of funds by insurance comanies
1.. regulating maintenance of margin of solvency4
1,. ad5udication of disutes between insurers and
intermediaries or insurance intermediaries4
1-. suervising the functioning of the Tariff *dvisory
"ommittee4
1&. Decifying the ercentage of remium income of the insurer to
finance schemes for romoting and regulating rofessionals
orgnisations4
1H. secifying the ercentage of life insurance business and
general insurance business to be undertaken by the insurer
in the rural or social sector4
17. e3ercising such other owers as may be
rescribed in the *ct
*dvisory committee8
age 20
Insurance & IRDA
IRA* consists of a "hairman and some ermanent as well as art time
members. The regulations$ however$ are enacted under the guidance of a
statutory advisory committee. The advisory committee consists of following
individuals and e3-officio authorities8
"hairman8 Cari Garayana is the current "hairman of IRA*.
Bull-time )embers8 "urrently$ they are )r F F Drinivasan 1Gonlife
)ember2$ Dri ! 0rabhakara 1#ife )ember2$ Ar R Fannan1)ember$
*ctuary2 and Dri R.F. Gair 1)ember$ B K I2. There is rovision for a
anel of other members and art time members. IRA* formed a high
owered Insurance #aw Reforms "ommittee known as F0G "ommittee
with imortant insurance advisors like )r G !ovardhan and Ar F "
)ishra as its members. There were also a few non-advisory committee
members like )r #iaquat Fhan and )r. T Liswanathan etc.
Bull force and utility of various institutions like *dvisory "ommittee and self-
regulatory organi@ations are not yet reali@ed as the regulator seems to be in a
long learning mode. Aue to over delegations$ Individual incumbents decide the
ace and e3tent of utili@ation of rudential and statutory bodies. Research is
limited to oinion seeking through legacy channels. )arket waits for revision of
insurance act and establishment meaningfully functioning regulatory organs
devoid of e3cess delegation and sub5ective locali@ation of develoment
agencies.
Case Law
"ases of fraudulent comanies selling insurance roducts in India without a
licence from the sector regulator$ Insurance Regulatory and Aeveloment
age 21
Insurance & IRDA
*uthority 1Irda2$ are on the rise. Deveral such incidents have come to IrdaIs
attention in the last eight to ten months.
*ll these comanies were found to be involved in selling life insurance$
healthcare insurance olicies and related roducts to the ublic in certain
ockets of Aelhi$ )umbai and Bengaluru. They used to ro5ect themselves as
art of global insurance comanies and are said to have collected large amounts
of money from the ublic.
Irda came to know of at least two such incidents over the last few days.
Bengaluru-based *etna Cealthcare Getworks 1India2$ claiming to be a unit of
*etna of the ;D$ was found to be involved in selling health insurance roducts
and collecting money from alicants subscribing to the same. Dimilarly$
)umbai-based Aarwin 0latform #ife Insurance and Binance "omany and A0
#ife Insurance Binance$ claiming to be units of Aarwin 0latform !rou of the
Getherlands$ were also involved in offering life insurance roducts and have
allegedly collected a large amount of money$ Irda ointed out.
+ther such incidents too have been unearthed during the last eight to ten
months. *n unknown Aelhi-based comany was involved in selling olicies$
retending to be art of a Belarus-based insurance comany. Dimilarly$
)umbai-based Einner Insurance Benefits was caught issuing certificates of
rotection for health schemes and collecting money from alicants subscribing
to the same.
Ehile the insurance industry in India claims to be clueless about such incidents$
ersons closely involved in this business are believed to have blown the whistle
and brought these facts to IrdaIs notice for stringent action.
The regulatory body said that Othe above named comanies have not been
issued any licence>certificate of registration by itself under any of the rovisions
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Insurance & IRDA
of the Insurance *ct$ 1(,% and the Irda *ct$ 1((($ for carrying on the said
business. It is hereby clarified that carrying on insurance business without
obtaining the mandatory licence or certificate of registration from the Irda in
terms of rovisions of the Insurance *ct$ 1(,% and the Irda *ct$ 1((( amounts
to violation of the said statutes for which aroriate actions$ civil or criminal$
under the Insurance *ct and the Irda *ct could be taken u by the regulator
against such comanies.P
Bibliograhy
htt8>>en.wikiedia.org>wiki>InsuranceQRegulatoryQandQAevelomentQ*uthorit
yRAuties.."0owersQandQBunctionsQofQIRA*
htt8>>en.wikiedia.org>wiki>InsuranceQindustry
htt8>>en.wikiedia.org>wiki>InsuranceQRegulatoryQandQAevelomentQ*uthorit
yR*dvisoryQcommittee
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Insurance & IRDA
htt8>>en.wikiedia.org>wiki>Insurance
age 24