CHAPTER-3

INSURANCE REGULATORY

DEVELOPMENT AUTHORITY 3.1 Indian insurance industry

3.2 Regulators

3.3 Advertising code for insurance

companies ( By IRDA)

3.4 Amendments – on advertisements of

life insurance products.

3.5 Ombudsman

3.6 Tariff advisory committee (TAC)

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3.1 INDIAN INSURANCE INDUSTRY:

INSURERS

Insurance industry, as on 1.4.2000, comprised mainly two players: the state

insurers:

Life Insurers:

Life Insurance Corporation of India (LIC)

General Insurers:

General Insurance Corporation of India (GIC) (with effect from

Dec'2000, a National Reinsurer)

GIC had four subsidiary companies, namely (with effect from Dec'2000, these

subsidiaries have been de-linked from the parent company and made as

independent insurance companies.

1. The Oriental Insurance Company Limited

2. The New India Assurance Company Limited

3. National Insurance Company Limited

4. United India Insurance Company Limited.

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Yr: 2000-2001 : ( From 2nd April '2000 to 31st December'2001)

Insurance Industry in the year 2000-2001 had 16 new entrants, namely:

Life Insurers:

S.

No.

Registration

Number

Date of

Reg.

Name of the Company

1 101 23.10.2000 HDFC Standard Life Insurance Company Ltd.

2 104 15.11.2000 Max New York Life Insurance Co. Ltd.

3 105 24.11.2000 ICICI Prudential Life Insurance Company Ltd.

4 107 10.01.2001 Kotak Mahindra Old Mutual Life Insurance Limited

5 109 31.01.2001 Birla Sun Life Insurance Company Ltd.

6 110 12.02.2001 Tata AIG Life Insurance Company Ltd.

7 111 30.03.2001 SBI Life Insurance Company Limited .

8 114 02.08.2001 ING Vysya Life Insurance Company Private Limited

9 116 03.08.2001 Bajaj Allianz Life Insurance Company Limited

10 117 06.08.2001 Metlife India Insurance Company Ltd.

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General Insurers :

S.No. Registration

Number

Date of

Registration

Name of the Company

1 102 23.10.2000 Royal Sundaram Alliance Insurance

Company Limited

2 103 23.10.2000 Reliance General Insurance

CompanyLimited.

3 106 04.12.2000 IFFCO Tokio General Insurance Co.

Ltd

4 108 22.01.2001 TATA AIG General Insurance

Company Ltd.

5 113 02.05.2001 Bajaj Allianz General Insurance

Company Limited

6 115 03.08.2001 ICICI Lombard General Insurance

Company Limited.

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Yr: 2001-2002 : ( From 1st Jan 2001 to Dec. 2002)

Insurance Industry in this year, so far has 5new entrants; namely

Life Insurers:

S.No. Registration

Number

Date of

Reg.

Name of the Company

1 121 03.01.2002 Reliance Life Insurance Company Limited.

2 122 14.05.2002 Aviva Life Insurance Co. India Ltd.

General Insurers :

S.

No.

Registration

Number

Date of

Registration

Name of the Company

1 123 15.07.2002 Cholamandalam General Insurance

Company Ltd.

2. 124 27.08.2002 Export Credit Guarantee Corporation Ltd.

3. 125 27.08.2002 HDFC-Chubb General Insurance Co. Ltd.

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Yr: 2003-2004 : ( From 1st Jan 2003 till Date)

Insurance Industry in this year, so far has 1new entrants; namely

Life Insurers:

S.No. Registration

Number

Date of

Reg.

Name of the Company

1 127 06.02.2004 Sahara India Insurance Company Ltd.

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Yr: 2004-2005 :

Insurance Industry in this year, so far has 1new entrants; namely

Life Insurers:

S.No. Registration

Number

Date of

Reg.

Name of the Company

1 128 17.11.2005 Shriram Life Insurance Company Ltd.

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Yr: 2006-2007 :

Insurance Industry in this year, had 1new entrants; namely

Life Insurers:

S.

No.

Registration

Number

Date of

Reg.

Name of the Company

1 130 14.07.2006 Bharti AXA Life Insurance Company Ltd.

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Yr: 2007-2008 :

Insurance Industry in this year, had 5 new entrants; namely

Life Insurers:

S.

No.

Registration

Number

Date of Reg. Name of the Company

1 133 04.09.2007 Future Generali India Life Insurance

Company Limited

2 135 19.12.2007 IDBI Federal Life Insurance Company

Ltd.

General Insurers:

3 131 03-08-2007 Apollo Munich Health Insurance

Company Limited

4 132 04-09-2007 Future Generali India Insurance Company

Limited

5 134 16-11-2007 Universal Sompo General Insurance

Company Ltd.

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Yr: 2008-2009 :

Insurance Industry in this year, so far has 5 new entrants in Life and 3 new

entry in General ; namely

Life Insurers:

S.No. Registration

Number

Date of

Reg.

Name of the Company

1 136 08.05.2008 Canara HSBC OBC Life Insurance Company Ltd.

2 138 27.06.2008 Aegon Religare Life Insurance Company Ltd.

3 140 27.06.2008 DLF Pramerica Life Insurance Company Ltd.

4 142 Star Union Dai-ichi Life Insurance Co. Ltd.

5 143 05.11.2009 IndiaFirst Life Insurance Company Ltd.

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General Insurers:

S.No. Registration

Number

Date of

Reg.

Name of the Company

1 137 8.05.2008 Shriram General Insurance Company Limited,

2 139 27.06.2008 Bharti Axa General Insurance Company Ltd.

3 141 15.12.2008 Raheja QBE General Insurance Co. Ltd

The first batch of licenses were issued by the Insurance Regulatory and

Development Authority (IRDA) in 2001. As on july 2010, 23 Life Insurers and

also 23 are the players in the Indian Market.

3.2REGULATORS

Insurance is a federal subject in India. The primary legislation that deals with

insurance business in India is Insurance Act, 1938, and Insurance

Regulatory & Development Authority Act, 1999.

Insurance Regulatory and Development Authority (IRDA)

It is the administrative agency for Indian insurance industry, and was formed

by the Government of India for the supervision and development of the

insurance sector in India. The Insurance Regulatory and Development

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Authority was legally established by the IRDA Act which was enacted by the

Indian Parliament in 1999.

MISSION OF IRDA

The mission of Insurance Regulatory and Development Authority (IRDA) is 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.

Composition of IRDA

IRDA was constituted by an act of parliament. The Authority is a ten member

team consisting of:

(a) A Chairman.

(b) Five whole-time members

(c) Four part-time members

(1) Subject to the provisions of Section 14 of IRDA Act, 1999 and any other

law for the time being in force, the Authority shall have the duty to regulate,

promote and ensure orderly growth of the insurance business and re-insurance

business.

(2) Without prejudice to the generality of the provisions contained in sub-

section (1), the powers and functions of the Authority shall include, -

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Powers and Functions of IRDA

1. It issues the applicants in insurance arena, a certificate of registration

as well as renewal, modification, withdrawal, suspension or

cancellation of such registrations.

2. It protects the interests of the policyholders in any insurance

company in the matters related to the assignment of policy,

nomination by policyholders, insurable interest, and resolution of

insurance claim, submission value of policy and other terms and

proposals in the contract.

3. It also specifies obligatory credentials, code of conduct and practical

instructions for mediator as well as the insurance company. Apart

from this, it also defines the code of conduct for the surveyors and

loss assessors involved with the insurance business.

4. One of the major functions of IRDA includes endorsing competence

in the insurance business. Apart from this, upholding and regulating

professional organizations in insurance and re-insurance business is

also a major duty of IRDA.

5. IRDA is also entitled to for asking information, undertaking

inspection and investigating the audit of the insurers, mediators,

insurance intermediaries and other organizations related to the

insurance sector.

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6. It is also concerned with the regulation of the rates, profits,

provisions and conditions that may be offered by insurers in respect

of general insurance business if it is not controlled or regulated by

the Tariff Advisory Committee.

7. It is also entitled to supervise the functioning of the Tariff Advisory

Committee.

8. IRDA specifies the terms and pattern in which books of accounts are

to be maintained and statement of accounts shall be provided by

insurers and other insurance mediators.

9. It also regulates investment of funds by insurance companies as well

as the maintenance of margin of solvency.

10. It is also empowered to be involved in the arbitration of

disagreements between insurers and intermediaries or insurance

intermediaries.

11. It is meant to specify the proportion of premium income of the

insurer to finance policies.

12. IRDA also specifies the share of life insurance business and general

insurance business to be accepted by the insurer in the rural or social

sector.

13. Promoting efficiency in the conduct of insurance business;

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14. Promoting and regulating professional organisations connected with

the insurance and re-insurance business;

15. Ievying fees and other charges for carrying out the purposes of this

Act;

16. Calling for information from, undertaking inspection of, conducting

enquiries and investigations including audit of the insurers,

intermediaries, insurance intermediaries and other organisations

connected with the insurance business;

17. 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);

18. Specifying the form and manner in which books of account shall be

maintained and statement of accounts shall be rendered by insurers

and other insurance intermediaries;

19. Regulating investment of funds by insurance companies;

20. Regulating maintenance of margin of solvency.

21. Adjudication of disputes between insurers and intermediaries or

insurance intermediaries;

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22. Supervising the functioning of the Tariff Advisory Committee;

23. Specifying the percentage of premium income of the insurer to

finance schemes for promoting and regulating professional

organisations referred to in clause (f);

24. Specifying the percentage of life insurance business and general

insurance business to be undertaken by the insurer in the rural or

social sector; and exercising such other powers as may be prescribed

Impact Of IRDA On Indian Insurance Sector

The creation of IRDA has brought revolutionary changes in the Insurance

sector. In last 10 years of its establishment, the insurance sector has seen

tremendous growth. When IRDA came into being; only players in the

insurance industry were Life Insurance Corporation of India (LIC) and General

Insurance Corporation of India (GIC), however in last decade 23 new players

have emerged in the field of insurance. The IRDA also successfully deals with

any discrepancy in the insurance sector.

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3.3 ADVERTISING CODE FOR INSURANCE

COMPANIES ( BY IRDA)

INSURANCE REGULATORY AND DEVELOPMENT AUTHORITY,

NEW DELHI

NOTIFICATION

New Delhi, the 14th July, 2000

Insurance Regulatory and Development Authority (Insurance

Advertisements and Disclosure) Regulations, 2000

F.No.IRDA/Reg./7/2000.--

In exercise of the powers conferred by section 26 of the Insurance Regulatory

and Development Authority Act, 1999 (41 of 1999), the Authority in

consultation with the Insurance Advisory Committee, hereby makes the

following regulations, namely:-

1. Short title and commencement — (1) These regulations may

be called the Insurance Regulatory and Development Authority

(Insurance Advertisements and Disclosure) Regulations, 2000.

(2) They shall come into force on the date of their publication in the

Official Gazette.

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Definitions — Unless the context otherwise requires, —

(a) "Authority" means the Insurance Regulatory and Development

Authority established under sub-section (1) of section 3 of The

Insurance Regulatory and Development Authority Act, 1999 (41 of

1999);

(b) "Insurance advertisement" means and includes any communication

directly or indirectly related to a policy and intended to result in the

eventual sale or solicitation of a policy from the members of the

public, and shall include all forms of printed and published materials

or any material using the print and or electronic medium for public

communication such as:

i) Newspapers, magazines and sales talks;

ii) Billboards, hoardings, panels;

iii) Radio, television, website, e-mail, portals;

iv) Representations by intermediaries;

v) Leaflets;

vi) Descriptive literature/ circulars;

vii) Sales aids flyers;

viii) Illustrations form letters;

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ix) Telephone solicitations;

x) Business cards;

xi) Videos;

xii) Faxes; or

xiii) Any other communication with a prospect or a policyholder

that urges him to purchase, renew, increase, retain, or modify

a policy of insurance.

Explanation: The following materials shall not be considered to be

an advertisement provided they are not used to induce the purchase,

increase, modification, or retention of a policy of insurance:— (i)

Materials used by an insurance company within its own organization

and not meant for distribution to the public;

Communications with policyholders other than materials urging

them to purchase, increase, modify surrender or retain a policy;

Materials used solely for the training, recruitment, and education

of an insurer's personnel, intermediaries, counselors, and

solicitors, provided they are not used to induce the public to

purchase, increase, modify, or retain a policy of insurance

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iv) Any general announcement sent by a group policyholder to

members of the eligible group that a policy has been written or

arranged.

(c) " Intermediary or insurance intermediary includes insurance

brokers, reinsurance brokers, insurance consultants, surveyors

and loss assessors, or any other person representing or assisting

an insurer in one or more of the following:

i) Soliciting, negotiating, procuring, or effectuating an

insurance contract or a renewal of an insurance contract;

ii) Disseminating information relating to coverage or rates;

iii) Forwarding an insurance application;

iv) Servicing and delivering an insurance policy or contract;

v) Inspecting a risk;

vi) Setting a rate;

vii) Investigating or assessing a claim or loss;

viii) Transacting a matter after the effectuation of a contract; or

ix) Representing or assisting an insurer or other person in any

other manner in the transaction of insurance with respect

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to a subject of insurance resident, located or to be

performed in India.

x) Servicing a policy or contract.

(d) "Unfair or misleading advertisement" will mean and include any

advertisement:

(i) That fails to clearly identify the product as insurance;

ii) Makes claims beyond the ability of the policy to deliver or

beyond the reasonable expectation of performance;

iii) Describes benefits that do not match the policy provisions;

Uses words or phrases in a way which hides or minimizes

the costs of the hazard insured against or the risks inherent

in the policy;

Omits to disclose or discloses insufficiently, important

exclusions, limitations and conditions of the contract;

Gives information in a misleading way;

Illustrates future benefits on assumptions which are not

realistic nor realisable in the light of the insurer's current

performance;

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Where the benefits are not guaranteed, does not explicitly

say so as prominently as the benefits are stated or says so

in a manner or form that it could remain unnoticed;

Implies a group or other relationship like sponsorship,

affiliation or approval, that does not exist;

Makes unfair or incomplete comparisons with products

which are not comparable or disparages competitors.

"Prospect" means any party that enters or proposes to enter

into an insurance contract directly, or through an

insurance intermediary.

Words and expressions used and not defined in these regulations but

defined in the Insurance Act, 1938 (4 of 1938), or the Life Insurance

Corporation Act, 1956 (31 of 1956) or the General Insurance Business

Nationalisation) Act, 1972 (57 of 1972), or Insurance Regulatory and

Development Authority Act, 1999 (41 of 1999) shall have the meanings

respectively assigned to them in those Acts or the rules as the case may be.

3. Compliance and control — (1) Every insurer or intermediary or insurance

agent shall —

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(i) have a compliance officer, whose name and official position in

the organisation shall be communicated to the Authority, and he

shall be responsible to oversee the advertising programme;

(ii) Establish and maintain a system of control over the content, form,

and method of dissemination of all advertisements concerning its

policies.

(iii) Maintain an advertising register at its corporate office which must

include:

(a) A specimen of every advertisement disseminated, or issued or

a record of any broadcast or telecast, etc.;

(b) A notation attached to each advertisement indicating the

manner, extent of distribution and form number of any policy

advertised, and

(iv) Maintain a specimen of all advertisements for a minimum period

of three years.

(v) File a copy of each advertisement with the Authority as soon as it

is first issued, together with information:

(a) An identifying number for the advertisement;

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(b) The form number(s) of the policy(ies) advertised

and when the product/s were approved by the

Authority;

(c) A description of the advertisement and how it is

used.

(d) The method or media used for dissemination of the

advertisement.

(vi) File a certificate of compliance with their annual statement

stating that, to the best of its knowledge, advertisements

disseminated by the insurer or by its intermediaries during the

preceding year have complied with the provisions of these

regulations and the advertisement code as stated in regulation 12.

(2) The advertisement register shall be subject to inspection and review by

the Authority for content, context, prominence and position of required

disclosures, omissions of required information, etc.

4. Changes in advertisement — (1) Any change in an advertisement would

be considered a new advertisement.

(2) All the provisions of regulation 3 shall apply mutatis mutandis to an

advertisement referred to in sub regulation (i).

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(3) The Authority shall be informed at the time of filing the advertisement

the extent of change the original advertisement

5. Insurance company advertisements — (1) Every insurance company shall

be required to prominently disclose in the advertisement and that part of the

advertisement that is required to be returned to the company or insurance

intermediary or insurance agent by a prospect or an insured the full

particulars of the insurance company, and not merely any trade name or

monogram or logo.

(2) Where benefits are more than briefly described, the form number of the

policy and the type of coverage shall be disclosed fully.

6. Advertisements by insurance agents — (1) Every advertisement by an

insurance agent that affects an insurer must be approved by the insurer in

writing prior to its issue;

(2) It shall be the responsibility of the insurer while granting such approval

to ensure that all advertisements that pertain to the company or its products

or performance comply with these regulations and are not deceptive or

misleading.

Explanation: An agent shall not be required to obtain written approval of

the company prior to issue for: —

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(i) Those advertisements developed by the insurer and provided to the

agents;

Generic advertisements limited to information like the agent's name,

logo, address, and phone number; and

Advertisements that consist only of simple and correct statements

describing the availability of lines of insurance, references to

experience, service and qualifications of agents; but making no

reference to specific policies, benefits, costs or insurers.

7. Advertisements by insurance intermediaries— Only properly licensed

intermediaries may advertise or solicit insurance through advertisements.

8. Advertising on the Internet — (1) Every insurer or intermediary's web site

or portal shall —

(i) Include disclosure statements which outline the site’s specific

policies vis-á-vis the privacy of personal information for the protection

of both their own businesses and the consumers they serve.

(ii) Display their registration/ license numbers on their web sites.

(2) For the purposes of these regulations, except where otherwise

specifically excluded or restricted, no form or policy otherwise permissible

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for use shall be deemed invalid or impermissible if such form or policy

accurately reflects the intentions of the parties in such form or policy as

published electronically or transmitted electronically between parties.

9. Identity of advertiser — Every advertisement for insurance shall

(i) State clearly and unequivocally that insurance is the subject matter of

the solicitation; and

(ii) State the full registered name of the insurer/ intermediary/ insurance

agent.

10. Endorsements and other third-party involvement (1) A third party,

group or association shall not: —

(i) Distribute information about an insurance policy, intermediary or

insurer on its letterhead.

(ii) Allow an insurance intermediary or insurer to distribute information

about an insurance policy, insurance or insurance company on its

letterhead.

(iii) Distribute information about an individual insurance policy, or

about an intermediary or insurer in its envelopes, unless—

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a) The third party is providing only a distribution service for the

insurance advertisement and is not itself soliciting the coverage,

and

b) The insurance information is a piece separate from any other

information distributed by the third party and clearly indicates its

origin.

(iv) Recommend that it's members purchase specific insurance products.

(v) Imply that a person must become a member of it's organization in

order to purchase the policy.

(vi) Imply that a purchaser of a policy by becoming a member of a

limited group of persons shall receive special advantages from the

insurer not provided for in the policy.

Provided that a third party, group or association may:—

(i) Endorse an insurance company or insurance intermediary's product

and provide truthful statements, quotes, and testimonials endorsing

the insurance products to the insurance company for use in the

company's advertisements, so long as the language does not convey

directly or indirectly a recommendation that members of the

organisation purchase the products.

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(ii) Provide an insurance company with information about its

membership and collect compensation based upon sales for that

information.

11. Procedure for action in case of complaint —

(1) If an advertisement is not in accordance with these regulations the

Authority may take action in one or more of the following ways:

(i) Issue a letter to the advertiser seeking information within a

specific time, not being more than ten days from the date

of issue of the letter;

(ii) Direct the advertiser to correct or modify the

advertisement already issued in a manner suggested by the

Authority with a stipulation that the corrected or modified

advertisement shall receive the same type of publicity as

the one sought to be corrected or modified;

(iii) Direct the advertiser to discontinue the advertisement

forthwith;

(iv) Any other action deemed fit by the Authority, keeping in

view the circumstances of the case, to ensure that the

interests of the public are protected.

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(2) The advertiser may seek additional time from the Authority to comply

with the directions justifying the reasons therefore. The Authority, may,

however, refuse to grant extension of time if it feels that the advertiser is

seeking time only to delay the matters.

(3) Any failure on the part of the advertiser to comply with the directions of

the Authority may entail the Authority to take such action as deemed

necessary including levy of penalty.

12. Adherences to advertisement code — Every insurer or intermediary shall

follow recognised standards of professional conduct as prescribed by the

Advertisement Standards Council of India (ASCI) and discharge its

functions in the interest of the policyholders.

13. Statutory warning — (1) Every proposal for an insurance product shall

carry the following stipulation, as prescribed in section 41 of the Insurance

Act, 1938 (4 of 1938):— "No person shall allow or offer to allow, either

directly or indirectly, as an inducement to any person to take out or renew or

continue an insurance in respect of any kind of risk relating to lives or property

in India, any rebate of the whole or part of the commission payable or any

rebate of the premium shown on the policy, nor shall any person taking out or

renewing or continuing a policy accept any rebate, except such rebate as may

be allowed in accordance with the published prospectus or tables of the

insurer."

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(2) If any person fails to comply with sub regulation (1) above, he shall be

liable to payment of a fine, which may extend to rupees five hundred.

3.4 AMENDMENTS – ON ADVERTISEMENTS OF LIFE

INSURANCE PRODUCTS.

Attention is invited to Regulation 2(d) of IRDA (Insurance Advertisements and

Disclosures) Regulation, 2000 & Part-IV of Guidelines for Unit Linked Life

Insurance Products issued via Circular No. 032/IRDA/ACTL/Dec. 2005, dated

December 21, 2005 with regard to insurance advertisements.

Commentary –Applicability of Circular is applicable only to Life Insurance

Products Advertisement. This circular will be in addition to existing

regulations, guidelines and circulars. Hence compliance of all in addition to

the new one is required on the part of Life insurers.

A review of the Advertisements, especially those relating to Unit Linked Life

Insurance products reveals the necessity to improve the content and

presentation in compliance with the provisions of the above referred

Regulations and Guidelines.

Therefore, in order to enhance the extant transparency of the Insurance

Advertisements, the Authority stipulates the following measure to be complied

with by all life insurers –

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1. Where any insurance advertisement highlights the benefit of Guarantees,

a clear disclosure of underlying conditions under which the guarantee

operates must be made, wherever applicable. In all such cases, all

conditions (including cost of guarantee, charges) under which the

guarantee operates need a prominent mention. If the underlying

conditions are very elaborate, the text/ wording on Guarantee must be

accompanied by the phrase “Conditions Apply” in a font that is at least

50% of the font used to highlight the guarantee. These conditions must be

distinctly mentioned in legible font beneath, not making it part of other

applicable disclosures.

Commentary – Wherever an insurance advertisement highlights

Guarantee benefits – disclose the conditions under which such a

guarantee operates.

Disclosure of Conditions of guarantee should prominently include –cost

of guarantee and charges thereof.

Wherever conditions of guarantee is very elaborate – the text/wording on

Guarantee must be accompanied with “Conditions Apply”. (Font size –

minimum 50% of the font used to highlight the guarantee).

2. All insurance advertisements must prominently state the availability

of underlying element of “Life Insurance Coverage” to clearly identify

the product as an insurance product.

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Commentary – Advertisement must prominently mention the element of

“Life Insurance Coverage” so as to identify it as Life Insurance Product.

3. The brand names of insurance product must not use the terms or phrases

that convey a fabricated sense of security.

Commentary – Insurance product should not be named as – so that it

sounds like conveying a false / fabricated sense of security to prospective

buyer of the product.

5. In respect of Unit Linked Life Insurance Products that actual asset mix

of various underlying funds vis-à-vis the asset composition of approved

asset pattern shall be placed on the web portal of respective insurance

companies at least on a half yearly basis. This information on

investment updates is to ensure that clear, actual and timely information

is made available to prospects to make an informed financial decision.

Commentary – Additional disclosure requirements via website of the Life

Insurance Company on half yearly basis. The area of disclosures will be

–“Actual Asset Mix of various funds in relation to asset composition”.

All Life Insurers are directed to follow the above guidelines scrupulously. The

above guidelines are in addition to existing regulations, guidelines and circulars

that are in vogue. This circular is issued in exercise of the powers conferred

under Section 14(1) of the IRDA Act, 1999 to protect the interest of

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policyholders and to regulate, promote and ensure the orderly growth of

insurance industry.

3.5 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 policyholders 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 Insurance 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.

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Eligibility

Ombudsman is drawn from Insurance Industry, Civil Services and Judicial

services.

Terms of Office:

An insurance Ombudsman is appointed for a term of three years or till the

incumbent attains the age of sixty five years, whichever is earlier. Re-

appointment is not permitted.

Territorial jurisdiction of Ombudsman:

The governing body has appointed twelve Ombudsmen across the country

allotting them different geographical areas as their areas of jurisdiction. The

Ombudsman may hold sitting at various places within their area of jurisdiction

in order to expedite disposal of complaints. The offices of the twelve insurance

Ombudsmans are located at (1) Bhopal, (2) Bhubaneswar, (3) Cochin, (4)

Guwahati, (5) Chandigarh, (6) New Delhi, (7) Chennai, (8) Kolkata, (9)

Ahmedabad, (10) Lucknow, (11) Mumbai, (12) Hyderabad. The areas of

jurisdiction of each Ombudsman has been mentioned in the list of Ombudsman.

Office Management:

The Ombudsman has a secretarial staff provided to him by the insurance

council to assist him in discharging his duties. The total expenses on

Ombudsman and his staff are incurred by the insurance companies who are

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members of the insurance council in such proportion as may be decided by the

governing body.

Removal from office:

An Ombudsman may be removed from service for gross misconduct committed

by him during his term of office. The governing body may appoint such person

as it thinks fit to conduct enquiry in relation to misconduct of the Ombudsman.

All enquiries on misconduct will be sent to Insurance Regulatory and

Development Authority which may take a decision as to the proposed action to

be taken against the Ombudsman. On recommendations of the IRDA, the

Governing Body may terminate his services , in case he is found guilty.

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, (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.

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Ombudsman's powers are restricted to insurance contracts of value not

exceeding ` 20 lakhs. The insurance companies are required to honour the

awards passed by an Insurance Ombudsman within three months.

Manner of lodging complaint:

The complaint by an aggrieved person has to be in writing, and addressed to

the insurance Ombudsman of the jurisdiction under which the office of the

insurer falls. The complaint can also be lodged through the legal heirs of the

insured. Before lodging a complaint:

i) The complainant should have made a representation to the insurer named in

the complaint and the insurer either should have rejected the complaint or the

complainant have not received any reply within a period of one month after the

concerned insurer has received his complaint or he is not satisfied with the

reply of the insurer.

ii) The complaint is not made later than one year after the insurer had replied.

iii) The same complaint on the subject should not be pending with before any

court, consumer forum or arbitrator.

Recommendations of the Ombudsman:

When a complaint is settled through the mediation of the Ombudsman, he shall

make the recommendations which he thinks fair in the circumstances of the

case. Such a recommendation shall be made not later than one month and

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copies of the same sent to complainant and the insurance company concerned.

If the complainant accepts recommendations, he will send a communication in

writing within 15 days of the date of receipt accepting the settlement.

Award

The ombudsman shall pass an award within a period of three months from the

receipt of the complaint. The awards are binding upon the insurance

companies. If the policy holder is not satisfied with the award of the

Ombudsman he can approach other venues like Consumer Forums and courts

of law for redressal of his grievances.

As per the policy-holder's protection regulations, every insurer shall inform the

policy holder along with the policy document in respect of the insurance

Ombudsman in whose jurisdiction his office falls for the purpose of grievances

redressal arising if any subsequently.

Steady increase in number of complaints received by various Ombudsman

shows that the policy-holders are reposing their confidence in the institution of

Insurance Ombudsman.

3.6 TARIFF ADVISORY COMMITTEE (TAC)

(Statutory Body under Insurance Act 1938)

Tariff Advisory Committee controls and regulates the rates, advantages, terms

and conditions that may be offered by insurers in respect of General Insurance

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Business relating to Fire, Marine (Hull), Motor, Engg. and workmen

compensation.

Effective 22/07/98, the TAC Board has been reconstituted with seven members

representing the present General Insurance Industry and eight members from

government and industry.

The Controller of Insurance cum Chairman IRDA is the Chairman of TAC.