Presented By• Manpreet • Satveer• Manveer• Satveer• Rupinder• Rajn i• Gursaman

ACKNOWLEDGEMENT

We wish to express our profound gratitude to Baba Farid of College for giving us as an opportunity to be part of their esteem organization and enhance our knowledge by granting permission to do our project on “RULES AND REGULATIONS OF IRDA” under their guidance.

We would like to thank Ms. Abhiruchi for giving us the opportunity to work on a insurance. She gave us a good chance to learn a lot of things while doing this project. We are grateful for this opportunity.

I would also like to thank my group members too for helping me in this project and shared their views related to our project.

TODAY’S AGENDA Insurance

IrDA

History of IrDA

Mission of IrDA

Duties and powers of IrDA

IrDA regulations

Claim

Types of claim

Settlement of claim

WHAT IS INSURANCE?

In simple words it means it’s a contract between two parties first party is insurer (insurance company) and other party is insured (policy holder).

Insurance is a form of risk management primarily 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 exchange for payment.

An insurer is a company selling the insurance; the insured, or policyholder, is the person or entity buying the insurance policy. The amount to be charged for a certain amount of insurance coverage is called the premium.

FUNTIONS OF INSURANCE

Insurance provides certainty

Insurance provides protection

Risk-Sharing

Prevention of Loss

Provides Capital

Improves Efficiency

Helps in Economic Progress

INTRODUCTION OF IRDA

The IRDA (Insurance Regulatory and Development

Authority) is the national regulatory body for Insurance

industry. It regulates and develops the insurance industry in India.

Conti……

Mr. J S. Hari Narayana

CHAIRMAN, IRDA

• It was constituted by a Parliament of India act called

Insurance Regulatory and Development Authority Act,

1999 and duly passed by the Government of India.

• The agency operates its headquarters at Hyderabad,

Andhra Pradesh where it shifted from Delhi in 2001.

HISTORY OF IRDA

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 operations in India. It serves as an Authority to protect the interests of holders of insurance policies, to regulate, promote and ensure orderly growth of the insurance industry and for matters connected therewith.

M I S S I O N O F I R D A

Conduction of insurance businesses across India in an ethical manner

To promote, regulate and ensure orderly growth of the insurance industry and for matters connected therewith or incidental thereto

To protect the insurance industry and made rules and regulations

DUTIES OF IRDA

Control Protect Regulate Direction Monitoring Coordinate

POWERS OF IRDA 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

promoting efficiency in the conduct of insurance business;

promoting and regulating professional organizations connected with the insurance and re-insurance business

supervising the functioning of the Tariff Advisory Committee

CONTI..... specifying the percentage of life insurance

business and general insurance business to be undertaken by the insurer in the rural or social sector

control and regulation of the rates, advantages, terms and conditions that may be offered by insurers in respect of general insurance business not so controlled and regulated by the Tariff Advisory Committee under section 64U of the Insurance Act, 1938 (4 of 1938)

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

Requirement as to capital - No insurer carrying on the business of life insurance, general insurance or re-insurance in India on or after the commencement of the Insurance Regulatory and Development Authority Act, 1999, shall be registered unless he has, -

1. A paid-up equity capital of rupees one hundred crores, in case of a person carrying on the business of life insurance or general insurance

Insurance Regulatory and Development Authority (Registration of Indian Insurance Companies) Regulations, 2000

2. A paid-up equity capital of rupees two hundred crores, in case of a person carrying on exclusively the business as a re-insurer :

Joint venture: 26% foreign, 74% Indian

Manner of payment of fee for registration.- The fee of rupees fifty thousand for each class of business for registration shall be remitted by a bank draft issued by any scheduled bank in favour of the Insurance Regulatory and Development Authority payable at New Delhi

THE RULES & REGULATIONS FOR THE LIFE INSURANCE INDUSTRY IN INDIA Coverage

Life insurance companies are required to allocate, over the first five years of operation, 7 to 16 percent of their written policies in the rural sector, which is defined as an area with a population less than 5,000 and where more than 25 percent of males work in agriculture.

Riders

Riders, which are additions to insurance policies, should be clear with respect to benefits. In the case of term or group products, the premium related to health or critical illness riders shall not exceed 100 percent of the basic premium.

CONTI…. Investments Life insurance companies are required to

allocate their investment assets in the following manner: Government securities, at least 25 percent; government securities and other approved securities, at least 50%; approved investments should not exceed 35 percent; and investments in mortgage backed securities should be at least 15 percent.

Composite Insurance Current IRDA regulations don't favor composite insurance, which is the combination of life and non-life insurance products sold through the same company. Recognizing the uniqueness of micro-insurance in rural areas, the IRDA relaxed its policy to enable "tie-up" relationships between life and non-life insurance companies to offer consumers an integrated product. Insurers were also permitted to issue policies with a maximum cover of Rs 50,000 for general and life insurance under these new IRDA regulations

CONTI…. Agent Commissions A wide range of life insurance products is

available as of 2011. Yet existing barriers, such as a cumbersome claims-settlement process and a commission structure that favors new business over existing ones, limit their penetration in rural areas. The IRDA Micro Insurance Guidelines of 2005 sought to overcome this dilemma with a more equitable commission program that encouraged agents to service existing policyholders. Another IRDA breakthrough embraced NGOs, SHGs, MFIs and other organizations into the distribution channel with appropriate compensation.

IRDA Training Requirements:- In August 2004, the IRDA published a document entitled the "Concept Paper on Need for Regulations on Micro-Insurance in India." This paper discussed product design and collaboration of intermediaries with life and general insurance providers. However, it also raised quality-control concerns with its recommendation to reduce the training requirements of NGO life-insurance agents from 50 hours to 25 hours.

CONTI… IRDA Policy Quotas:- In 2002, the passage of a central

regulation, referred to as "The Obligation of Insurers to Rural Social Sectors," imposed a quota system on private insurers entering the Indian market after it was liberalized. The quota applied to rural areas with a population density of less than 400 people per square kilometer. It stipulated that life insurance policies amount to 5 percent of the total number sold in the first year and increased to 16 percent by year 5. The quota system placed considerable pressure on insurers to meet their targets to avoid IRDA fines. As a result, a few insurers have developed innovative products and delivery channels while others have not been as successful.

ULIP Regulation:- Under IRDA guidelines, traditional plans must invest at least 85 percent of their funds in low-yielding debt instruments. The popularity of ULIPs lies in their potential for higher returns and flexible investment choices. The IRDA, and market watchdog, SEBI, recently vied to become the official ULIP-regulating body in India. The Indian government ended the rivalry in 2010 with an ordinance declaring that ULIPs would be regulated by the IRDA.

FOR LIFE INSURANCE COMPANIES

Capital Reserves All life insurance companies must have capital reserves. A capital reserve is a financial requirement that insurance companies keep cash reserves in place to pay claims as they arise. Each state's capital reserve requirements vary and some states use mathematical as well as non-mathematical formulas and rules to determine how reserve requirements should be met.

Guarantee Corporation A guarantee corporation in every state guarantees a minimum benefit amount that is payable to every policy holder in the event that an insurer cannot pay claims and the reinsurance system fails. The guarantee amount varies by state, but is typically between $300,000 and $500,000 per insured individual.

CLAIM A claim is a demand that the

insurer redeem the promise made in the contract.

TYPES OF CLAIMS

Rider benefits

Death claims

Maturity claims

MATURITY CLAIM

A maturity claim is the sum insured, plus any accumulated bonuses. It is paid to insurer at the end/maturity of the plan.

A terminal or final additional bonus may be paid.

MODES OF PAYMENT OF CLAIM TO INSURED PERSON

Survival benefit payments Reduced sum insured (paid-up value) Discounted claims Commutation of installments

DEATH CLAIM

A death claim is where the life insurance company pays the sum insured to the nominee/beneficiary on the death of the insured during the term of the plan.

RIDER BENEFITS

A payment under a rider is made by the insurance company on the occurrence of a specified event according to the rider terms and conditions.

For example Accidental death benefit Critical illness Hospital care

VALID CLAIM

Was the insurance policy in force when the event occurred?

Have the original policy document, a completed claim form and all the other required documents been submitted?

Has the policy holder performed their part with regards to age admission and the disclosure of the material facts relevant to the policy?

Did the claim demand come from the right person, i.e. the person who is entitled to receive the claim amount?

Have all the other formalities that are required for a valid claim to be valid been fulfilled?

WHY CLAIM MAY BE INVALIDThe policy is not in force• If the policy was not in force when event

occurred, the insurance company will reject the claim

Excluded conditions apply

• If the death is caused by something excluded from the cover under the policy, the claim will not be met

The claim is fraudulent•If during the investigations, the company finds out that a material fact was deliberately suppressed by insured then it will reject claim

DUTIES AFTER DEATH AND DOCUMENTARY EVIDENCE

After the death of the life insured, is for insurance company to be advised that the death has taken place. Death notification may be sent by nominee, relative or insurance agent.

Documents required……. The policy document Proof of age( if age is not already admitted) Death certificate Legal evidence of title, if the policy is not

assigned or nominated.

EARLY DEATH CLAIMS If the claim occurs with in 3 years

from the date of risk, insurance company classify it as an early death.

A statement from the last medical attendant to attend the deceased before death, giving details of their last illness and the treatment given

A statement from the hospital, if the deceased had been admitted to hospital

A statement from the person who attended the last rites and had seen the dead body

A statement from the employer showing details of leave taken.

CONTINUE….

If the life insured had an unnatural death, such as an accident, by suicide or by unknown cause.

Then additional documents required…

Police first information report (FIR) Forensic report Post mortem report

IRDA GUIDELINES FOR CLAIM SETTLEMENT

A life insurance policy shall state the primary documents which are normally required to be submitted by a claimant in support of a claim.

A life insurance company, upon receiving claim, shall process the claim without delay.

A claim under a life policy shall be paid or be disputed giving all relevant reasons, with in 30 days from the date of receipt of all relevant papers and clarification required.

In the case of fraud the case is forward to court

PROCESS OF MATURITY CLAIMThe original policy has been handed in

The identify of the policyholder has been proved

The discharge form has been duly completed

The correct age was admitted & supporting age proof document supplied

All the premiums have been paid and are up to date

There are no assignments

PROCESS OF DEATH CLAIM

Information given to insurer about death of the life insured

documents Claim received

FRAUDULENT CLAIMS

Insurance fraud is a deliberate attempt to use insurance for unjustified financial gain. Insurance fraud include misrepresentation of facts.

In the case of fraud the case is forward to court

SUGGESTIONS

Every insured person has to give the right and proper information to the insurance company while taking insurance.

Every insurance company has to give the proper information to their clients about the terns and condition of the policy.

IrDA has to search the fraud parties. Consumer forum has to taken the strict

action against fraud.

THANK YOU