Presentation insurance 11

8/8/2019 Presentation insurance 11

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ContentsContents

What is IRDA ?What is IRDA ?Evolution/History of IRDA ?Evolution/History of IRDA ?Mission of IRDA & Composition of Authority.Mission of IRDA & Composition of Authority.

Expectation of IRDAExpectation of IRDAInsurance HistoryInsurance HistoryDuties, Powers & Functions of IRDADuties, Powers & Functions of IRDAImpact Of IRDA On Indian Insurance SectorImpact Of IRDA On Indian Insurance SectorConclusionConclusion


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WWhat is IRDA?hat is IRDA?

Insurance Regulatory & Development Authority (IRDA) isInsurance Regulatory & Development Authority (IRDA) isregulatory and development authority underregulatory and development authority underGovernment of India in order to protect the interests ofGovernment of India in order to protect the interests ofthe policyholders and to regulate, promote and ensurethe policyholders and to regulate, promote and ensure

orderly growth of the insurance industry.orderly growth of the insurance industry. It is basically a ten members' team comprising of aIt is basically a ten members' team comprising of a

Chairman, five full time members and four partChairman, five full time members and four part--timetimemembers, all appointed by Government of India.members, all appointed by Government of India.

Came into being in 1999 after the bill of IRDA wasCame into being in 1999 after the bill of IRDA waspassed in the Indian parliament.passed in the Indian parliament.


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Mission of IRDAMission of IRDA

To protect the interests of theTo protect the interests of thepolicyholders, to regulate, promote andpolicyholders, to regulate, promote and

ensure orderly growth of the insuranceensure orderly growth of the insuranceindustry and for matter connected thereindustry and for matter connected therewith or incidental there towith or incidental there to


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Composition of Authority underComposition of Authority under

IRDA Act, 1999IRDA Act, 1999 As per the section 4 of IRDA Act' 1999, InsuranceAs per the section 4 of IRDA Act' 1999, Insurance

Regulatory and Development AuthorityRegulatory and Development Authority(IRDA, which was constituted by an act of parliament)(IRDA, which was constituted by an act of parliament)specify the composition ofspecify the composition of

AuthorityAuthority

The Authority is a ten member team consisting ofThe Authority is a ten member team consisting of

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

(all appointed by the Government of India)(all appointed by the Government of India)


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ExpectationsExpectations

The law of India has following expectations from IRDAThe law of India has following expectations from IRDA

To protect the interest of and secure fair treatment to policyholders;To protect the interest of and secure fair treatment to policyholders;

To bring about speedy and orderly growth of the insurance industryTo bring about speedy and orderly growth of the insurance industry

(including annuity and superannuation payments), for the benefit of the(including annuity and superannuation payments), for the benefit of thecommon man, and to provide long term funds for accelerating growth ofcommon man, and to provide long term funds for accelerating growth ofthetheeconomy;economy;

To set, promote, monitor and enforce high standards of integrity, financialTo set, promote, monitor and enforce high standards of integrity, financialsoundness, fair dealing and competence of those it regulates;soundness, fair dealing and competence of those it regulates;

To ensure that insurance customers receive precise, clear and correctTo ensure that insurance customers receive precise, clear and correctinformation about products and services and make them aware of theirinformation about products and services and make them aware of their

responsibilities and duties in this regardresponsibilities and duties in this regard


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To ensure speedy settlement of genuine claims, to preventTo ensure speedy settlement of genuine claims, to preventinsurance frauds and other malpractices and put in place effectiveinsurance frauds and other malpractices and put in place effectivegrievance redressalmachinery;grievance redressalmachinery;

To promote fairness, transparency and orderly conduct in financialTo promote fairness, transparency and orderly conduct in financial

markets dealing with insurance and build a reliable managementmarkets dealing with insurance and build a reliable managementinformation system to enforce high standards of financial soundnessinformation system to enforce high standards of financial soundnessamongst market players;amongst market players;

To take action where such standards are inadequate or ineffectivelyTo take action where such standards are inadequate or ineffectivelyenforced;enforced;

To bring about optimum amount of selfTo bring about optimum amount of self--regulation in day to dayregulation in day to dayworking of the industry consistent with the requirements ofworking of the industry consistent with the requirements ofprudential regulation.prudential regulation.


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WWhat is INSURANCE?hat is INSURANCE?

Insurance, in law and economics, is a form of risk managementInsurance, in law and economics, is a form of risk managementprimarily used to hedge against the risk of a contingent loss.primarily used to hedge against the risk of a contingent loss.

Insurance is defined as the equitable transfer of the risk of aInsurance is defined as the equitable transfer of the risk of apotential loss, from one entity to another, in exchange for apotential loss, from one entity to another, in exchange for apremium.premium.

Insurance rate is a factor used to determine the amount, called theInsurance rate is a factor used to determine the amount, called thepremium, to be charged for a certain amount of insurance coveragepremium, to be charged for a certain amount of insurance coverage

Risk management, the practice of appraising and controlling risk,Risk management, the practice of appraising and controlling risk,has evolved as a discrete field of study and practicehas evolved as a discrete field of study and practice


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Evolution/History of IRDA andEvolution/History of IRDA and

insuranceinsur

ance

18181818 -- Oriental Life Insurance CompanyOriental Life Insurance Company 1st1stInsurance Company.Insurance Company.

18701870 -- Bombay Mutual Life Assurance SocietyBombay Mutual Life Assurance Society 1st1stLi feLi feInsuranceInsurance

Company.Company. 19121912 -- The Indian Life Assurance Companies Act enactedThe Indian Life Assurance Companies Act enacted

the1the1stLawstLaw toto Regulate the Life InsuranceRegulate the Life InsuranceBusiness.Business.

19281928 -- The Indian Insurance Companies Act enacted toThe Indian Insurance Companies Act enacted toenable theenable the GovernmentGovernment toto collect statisticalcollect statisticalinformationinformation about bothabout both lifelife&& nonnon--LifeLife insuranceinsurancebusinesses.businesses.


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1938: Earlier legislation consolidated & amended the1938: Earlier legislation consolidated & amended theInsurance Act with theInsurance Act with the

objective ofobjective ofprotecting theinterests ofprotecting theinterests of theinsuringtheinsuringpublic.public.

1956:2451956:245IndianIndian && foreignforeign insurersinsurers && providentprovidentsocietiessocieties are taken overare taken over by the central government & nationalized.by the central government & nationalized. LIC formed by an Act of Parliament, viz. LIC Act,LIC formed by an Act of Parliament, viz. LIC Act,

1956, with a capital1956, with a capital

contribution of Rs. 5 crore from the Government ofcontribution of Rs. 5 crore from the Government ofIndia.India. The first General Insurance Company established inThe first General Insurance Company established in

the year 1850 inthe year 1850 in Calcutta by the British.Calcutta by the British.


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Duties, Powers & Functions ofDuties, Powers & Functions of

IRDAIRDA It issues the applicants in insurance arena, a certificate of registration asIt issues the applicants in insurance arena, a certificate of registration aswell as renewal, modification, withdrawal, suspension or cancellation ofwell as renewal, modification, withdrawal, suspension or cancellation ofsuch registrations.such registrations.

It protects the interests of the policy holders in any insurance company inIt protects the interests of the policy holders in any insurance company inthe matters related to the assignment of policy, nomination by policythe matters related to the assignment of policy, nomination by policy

holders,i

nsurablei

nterest, and resoluti

on ofi

nsurance clai

m, submi

ssi

onholders,i

nsurablei

nterest, and resoluti

on ofi

nsurance clai

m, submi

ssi

onvalue of policy and other terms and proposals in the contract.value of policy and other terms and proposals in the contract. It also specifies obligatory credentials, code of conduct and practicalIt also specifies obligatory credentials, code of conduct and practical

instructions for mediator as well as the insurance company. Apart frominstructions for mediator as well as the insurance company. Apart fromthis, it also defines the code of conduct for the surveyors and lossthis, it also defines the code of conduct for the surveyors and lossassessors involved with the insurance business.assessors involved with the insurance business.

One of the major functions of IRDA includes endorsing competence in theOne of the major functions of IRDA includes endorsing competence in theinsurance business. Apart from this, upholding and regulating professionalinsurance business. Apart from this, upholding and regulating professional

organiz

ations

in

insurance and reorgan

izat

ions

in

insurance and re--

insurance bus

iness

is also a major duty

insurance bus

iness

is also a major dutyof IRDA.of IRDA.

IRDA is also entitled to for asking information, undertaking inspection andIRDA is also entitled to for asking information, undertaking inspection andinvestigating the audit of the insurers, mediators, insuranceinvestigating the audit of the insurers, mediators, insuranceintermediaries and other organizations related to the insurance sector.intermediaries and other organizations related to the insurance sector.

It is also concerned with the regulation of the rates, profits, provisions andIt is also concerned with the regulation of the rates, profits, provisions andconditions that may be offered by insurers in respect of general insuranceconditions that may be offered by insurers in respect of general insurancebusiness if it is not controlled or regulated by the Tariff Advisorybusiness if it is not controlled or regulated by the Tariff Advisory

CommitteeCommittee


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It is also entitled to supervise the functioning of the Tariff AdvisoryIt is also entitled to supervise the functioning of the Tariff AdvisoryCommittee. IRDA specifies the terms and pattern in which books ofCommittee. IRDA specifies the terms and pattern in which books ofaccounts are to be maintained and statement of accounts shall beaccounts are to be maintained and statement of accounts shall beprovided by insurers and other insurance mediators.provided by insurers and other insurance mediators.

It also regulates investment of funds by insurance companies asIt also regulates investment of funds by insurance companies as

well as the maintenance of margin of solvency.well as the maintenance of margin of solvency. It is also empowered to be involved in the arbitration ofIt is also empowered to be involved in the arbitration of

disagreements between insurers and intermediaries or insurancedisagreements between insurers and intermediaries or insuranceintermediaries.intermediaries.

It is meant to specify the proportion of premium income of theIt is meant to specify the proportion of premium income of theinsurer to finance policies.insurer to finance policies.

IRDA also specifies the share of life insurance business and generalIRDA also specifies the share of life insurance business and generalinsurance business to be accepted by the insurer in the rural orinsurance business to be accepted by the insurer in the rural orsocial sector.social sector.


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Types of InsuranceTypes of Insurance


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Regulatory Body:Regulatory Body: The insurance act should be changed .An insurance regulatory bodyThe insurance act should be changed .An insurance regulatory body

should be set up. Controller of insuranceshould be set up. Controller of insurance--a part of the Financea part of the FinanceMinistryMinistry should be made independent.should be made independent.

Investments :Investments :Mandatory Investments of LIC Life Fund inMandatory Investments of LIC Life Fund in

government securities to be reduced fromgovernment securities to be reduced from 775%5% toto50%50%..

GIC and its subsidiaries are not to hold more than5%GIC and its subsidiaries are not to hold more than5% in anyin anycompany.company.

Customer Service:Customer Service:LIC should pay interest on delay on paymentLIC should pay interest on delay on paymentbeyond 30 days.beyond 30 days.

Insurance companies must be encouraged to set up unit linkInsurance companies must be encouraged to set up unit linkpension planspension plans


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INDIANSCENARIOOFINSURANCEINDIANSCENARIOOFINSURANCE


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ndian Insurance Industry: Newndian Insurance Industry: New

Avenues forAvenues for

Growth 2012Growth 2012 The potential of the Indian insurance industry isThe potential of the Indian insurance industry is

huge. HOW???It has an annual growth rate ofhuge. HOW???It has an annual growth rate of1515--20%& the largest number of life insurance20%& the largest number of life insurancepolicies in force.policies in force.

Total value of the Indian insurance marketTotal value of the Indian insurance market(2004(2004--05) is at Rs. 450 billion (US$10 billion).05) is at Rs. 450 billion (US$10 billion).

Insurance & Banking Services contribution toInsurance & Banking Services contribution to

the country's gross domestic product (GDP) isthe country's gross domestic product (GDP) is7%The funds available with the state7%The funds available with the state--owned Lifeowned LifeInsurance CorporationInsurance Corporation

(LIC) for investments are 8% of GDP(LIC) for investments are 8% of GDP


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TheThe year 1999 saw a revolution in the Indianyear 1999 saw a revolution in the Indianinsurance sectorinsurance sector------------the ending of governmentthe ending of governmentmonopolymonopoly----------the passage of the Insurancethe passage of the Insurance

Regulatory and Development Authority (IRDA)Regulatory and Development Authority (IRDA)BillBill yyA foreign partner can holdA foreign partner can hold 26% equity26% equity ininan insurance company, but there was a proposalan insurance company, but there was a proposalto increaseto increase this limit to 49%.this limit to 49%.

Foreign investments ofForeign investments of Rs. 8.7 billionRs. 8.7 billion havehavepoured into the Indian market &poured into the Indian market & 21 private21 privatecompaniescompanies have been granted licenseshave been granted licenses


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Insurance studyInsurance study


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Study : India's insurance sector toStudy : India's insurance sector to

see 500 per centsee 500 per cent

growth by 2010growth by 2010 India's insurance sectorIndia's insurance sector --500 %500 % growth over thegrowth over the next three yearsnext three years --60 billion60 billion--dollar industry by 2010 India's more thandollar industry by 2010 India's more than one billionone billionpeoplepeople are uninsured, the study by the Associated Chambers ofare uninsured, the study by the Associated Chambers ofCommerce and Industry (Assocham) said.Commerce and Industry (Assocham) said.

A large part of rural India is still untapped due toA large part of rural India is still untapped due to poorpoor

distribution,large distances&distribution,large distances& high costs relative to returns, saidhigh costs relative to returns, saidAssocham president Anil K Agarwal He said the study had revealedAssocham president Anil K Agarwal He said the study had revealedthatruralthatrural && semisemi--urban Indiaurban India would contribute 35 billion dollars towould contribute 35 billion dollars tothe Indian insurance industry by 2010.the Indian insurance industry by 2010.

The study added that the urban sector insurance was estimated toThe study added that the urban sector insurance was estimated toreachreach 25 billion dollars by 2010,25 billion dollars by 2010, life insurance 15 billionandlife insurance 15 billionand nonnon-- lifelifeinsurance 10 billion dollars.insurance 10 billion dollars.


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ConclusionConclusion

Insurance canbe summed upasInsurance canbe summed upasPrayingPrayingforthe bestbeingPREPARED fortheforthe bestbeingPREPARED fortheWORST.WORST.

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Presentation insurance 11