INSURANCE (Governed by Insurance Act -1938,Now by – IRDA Act-1999)

8/14/2019 INSURANCE (Governed by Insurance Act -1938,Now by IRDA Act-1999)

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INSURANCE(Governed by Insurance Act -1938,Now By

IRDA act-1999)

History:-Methods of transferring or distributing risk werepracticed by Chinese and Babylonian traders as long ago asthe 3rd and 2nd millennia BC.

The Greeks and Romans introduced the origins of healthand life insurance c. 600 AD.

India:- First Indian insurance company was CalcuttaInsurance Company which setup in 1798 exclusively forEuropeans. The Bombay Life Assurance Society formed in

1870 Insured Indians first time.


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.Indian life assurance companies act ,1912was first statutory act to regulate lifebusiness.

In 1928 the indian insurance companies actenacted.

In 1938 insurance act amended to consolidatelegislation and effective control over the

activities of insurer.19th Jan.1956 LIC is formed by absorbing 154

Indian,16 non-indian insurer and 75 providentsocieties.


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.GIC was Incorporated as a company in Year1971 . In 1972 General InsuranceBusiness(Nationalization) Act passed witheffect from 1st Jan 1973 GIC is formed by

amalgamation of 107 insurer and 4 companyformed named as

National Insurance Co. Ltd.

The New India Assurance Co. Ltd.The Oriental Insurance Co. Ltd.

The United India insurance co. Ltd.


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ContIn Dec. 2000 subsidiaries of GIC were

restructured as independent company. And inJuly 2002 parliament passed a bill of De-linking of four subsidiaries of GIC.

Today there are 14 General insurancecompanies including ECGC & Agricultural

insurance corporation of India and 14 lifeInsurance company operating in India.


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Definition:-

Insurance is pooling of risks. In contract ofinsurance ,the insurer (insurance company)agree/undertakes, in consideration of a sum ofmoney (premium) , to make good the losssuffered by the insured against a specifiedrisk such as fire , accident etc or anycontingency.


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Indian Insurance

companya company defined and registered under the

companies act in which aggregate holding ofequity shares by a foreign company either byitself or by nominees/subsidiaries ,does notexceed 26% paid up equity capital and whosesole purpose is to carry onlife/general/reinsurance business


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Insurer (a) any individual or unincorporated body of

individuals or body corporate incorporatedunder the law of any country carrying on

insurance business which (i) carries on that business in or

(ii) has his or its principal place of business oris domiciled in

(iii) with the object of obtaining insurancebusiness, employs a representative, ormaintains a place of business, in India


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CONTINUED.(b) Any body corporate carrying on the

business of insurance, which is a bodycorporate incorporated under any law for thetime being in force in or stands to any suchbody corporate in the relation of a subsidiarycompany within the meaning of the IndianCompanies Act, 1913


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Insurance agentMeans an insurance agent licensed under

section 42 who receives or agrees to receivepayment by way of commission or otherremuneration in consideration of his solicitingor procuring.


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Life insurance

businessBusiness of effecting contracts of insurance

upon human life, including any contractwhereby the payment of money is assured ondeath (except death by accident only) or thehappening of any contingency dependent onhuman life.


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Parties :- There are two parties to anInsurance contracts as:-

Insurer/assurer/underwriter,Insured/assured/beneficiary

Policy :- The document laying down theterm of contract is called (insurance) policy.


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Principal AgentA person who is in consideration of any

commission,--

(i) performs any administrative and organisingfunctions for the insurer, and

(ii) procures general insurance businesswhether wholly or in part by employing or

causing to be employed insurance agents onbehalf of the insurer.


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Special agentA person who is consideration of any

commission, procures life insurance businessfor the insurer whether wholly or in part byemploying or causing to be employed .


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Restriction on name of insurer

An insurer shall not be registered by a nameidentical with that by which an insurer inexistence is already registered, or so nearlyresembling that name .


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Fundamental principals

Principle of Insurable

interest.Principle of Utmost good.

Principle of Indemnity .Principle of Subrogation.

Principle of Contribution.


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Type of InsuranceLife insurance

Grant of disability and double/triple indemnity

accident benefits,Grant of annuities upon human life and

Grant of superannuation allowance/ annuitiespayable out of any fund applicable solely to

the relief and maintenance of personengaged.


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Type of Life Insurance

PolicesEndowment Policy

Whole Life Policy

Limited Payment Life Policy

Joint Life Policy

Convertible Whole Life Policy

Annuities


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ContinSinking Fund Policy

Double Accident Indemnity Policy

Janata Policy


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General insuranceIt means fire, marine / miscellaneous

insurance business whether carried onsingly or in combination with one/more ofthem


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Types of General

InsuranceFire insurance Policies

(a) Specific Policy

(b) Comprehensive Policy

(c) Valued Policy

(d) Floating Policy

e) Replacement or Reinstatement Policy:


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Marine Insurance

Policies(a) Voyage Policy

(b) Time Policy

(c) Mixed Policy

(d) Valued Policy:

(e) Open and Unvalued Policy

(f) Floating Policy


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Other Type of insuranceProperty insurance

Automobile insurance

Aviation insurance

Boiler insurance

Builder's risk insurance

Crop insurance

Earthquake insurance


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ContA fidelity bond

Flood insurance

Home insurance

Landlord insurance

Marine insurance

Surety bond insurance

Terrorism insurance etc.


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Health/ medical insurance:

This cover only two type of benefits

Re-imbursement of medical expenses relatedto specific diseases and

Hospitalization


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Some of policies are as

Individual/Group Mediclaim policy

Bhavishya Arogya policy

Jan Arogya BimaOverseas medical cover


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Liabilityinsurance/indemnity policiesEmployee liabilities

Employee state insurance liabilitiesNon-industrial risk

Professional liabilities

Product liabilities


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IRDAIn 1993 Government setup a committee under

chairmanship of RN Malhotra ,former Governor of RBIfor 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 upcapital and can operate with an Indian company.


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Composition of Authority underIRDA Act, 1999

The Authority is a ten member teamconsisting of

(a) a Chairman;(b) five whole-time members;(c) four part-time members


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Duties, Powers and Functions ofIRDA

To regulate, promote and ensure orderly growth ofthe insurance business and re-insurance business.

Issue to the applicant a certificate of registration,

renew, modify, withdraw, suspend or cancel suchregistration .

Protection of the interests of the policy holders inmatters concerning assigning of policy, nomination by

policy holders, insurable interest, settlement ofinsurance claim, surrender value of policy and otherterms and conditions of contracts of insurance;


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Cont.Specifying requisite qualifications, code of

conduct and practical training for intermediaryor insurance intermediaries and agents.

Specifying the code of conduct for surveyorsand loss assessors.

Promoting efficiency in the conduct of

insurance business.


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Cont.. Levying fees and other charges for carrying

out the purposes of this Act

Calling for information from, undertakinginspection of, conducting enquiries andinvestigations including audit of the insurers,intermediaries.

Control and regulation of the rates,advantages, terms and conditions that maybe offered by insurers in respect of generalinsurance business .


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ContSpecifying the form and manner in which booksof account shall be maintained and statement ofaccounts shall be rendered by insurers and other

insurance intermediaries.Regulating investment of funds by insurance

companies.

Regulating maintenance of margin of solvency

Adjudication of disputes between insurers andintermediaries or insurance intermediaries.


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Registration under

IRDAThe application accompanied by:-

A certified copy of memorandum and articleof association.

Name, address and occupation of Directors.

A statement of the classes of insurancebusiness done/to be done along with a

statement of deposits with the Reserve Bankof India.


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ContFor life business , a sum equivalent to 1% of

total gross premium not exceeding 10 crorewritten in India in any Financial year.

For General business 3% of total grosspremium not exceeding 10 crore.

Reinsurance business Rs.20 crore;

Rs.100,000.For cooperative life insurance business /

assurance companies should be Rs.2 lakh.


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ContA declaration verified by an affidavit by the principal officer of theinsurer that the requirement of paid up capital (Rs. 100 crore andRs.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 and,Standard policy forms of the insurer and statements of the insurer

and statements of the assured rates, advantages, terms andconditions to be offered in connection with insurance policies,together with a certificate in connection with life business by anactuary.


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ContThe receipt showing payment of fee (as

determined by IRDA regulation) not exceedingRs.50,000 for each class of business.

Such other document as may be specified byIRDA.


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Cancellation of

RegistrationHe fails to comply with the requirement of

deposit with the RBI.

He fails to comply with the requirementrelating to sufficiency of assets(assets-liabilities)

The whole of his deposit has been refunded

to him on court order when he cease to carryon business and all liabilities has beensatisfied/provided for.


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ContHe defaults in complying with or contravenesany requirement of insurance act/anyrule/order made or direction issued there

under,

The IRDA has reason to believe that any claimare unpaid for 3 month after final court orderin India.

He carries on any other business,


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ContHis business has been transferred to anyother person/amalgamated with any otherinsurer.

He defaults in complying with any directionsissued/order maid by IRDA .

He default in complying with or contravenes

any requirement of Companies Act/LIC Act/GICAct/FEMA etc


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List of Life Insurers..

Bajaj Allianz Life Insurance CompanyLimited

Birla Sun Life Insurance Co. LtdHDFC Standard life Insurance Co. Ltd

ICICI Prudential Life Insurance Co. Ltd.

ING Vysya Life Insurance Company Ltd.

Life Insurance Corporation of India

Max New York Life Insurance Co. Ltd

Met Life India Insurance Company Ltd.


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Cont Kotak Mahindra Old Mutual Life InsuranceLimited

SBI Life Insurance Co. Ltd

Tata AIG Life Insurance Company Limited Reliance Life Insurance Company Limited.

Aviva Life Insurance Co. India Pvt. Ltd.

Shriram Life Insurance Co, Ltd.

Sahara India Life Insurance Bharti AXA Life Insurance

Future Generali Life Insurance

IDBI Fortis Life Insurance


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Cont Canara HSBC Oriental Bank of Commerce

Life Insurance

Religare Life Insurance

DLF Pramerica Life Insurance

Star Union Dai-ichi Life Insurance

Agriculture Insurance Company of India

Apollo DKV Insurance

Cholamandalam MS General Insurance HDFC Ergo General Insurance Company

ICICI Lombard General Insurance

IFFCO Tokio General Insurance


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Cont

National Insurance Company Ltd

New India Assurance

Oriental Insurance Company

Reliance General InsuranceRoyal Sundaram Alliance Insurance

Shriram General Insurance Company Limited

Tata AIG General Insurance

United India InsuranceUniversal Sompo General Insurance Co. Ltd

Documents

INSURANCE (Governed by Insurance Act -1938,Now by – IRDA Act-1999)