IRDA by the dudes

IRDA
Insurance Regulatory & Development Authority is the controlling and regulatory apex body in the country for insurance sector and its chairman and members are appointed by Government of India. IRDAs HQ is located at Hyderabad.

Mission
To protect the interest of and secure fair treatment to policyholders. To bring about speedy and orderly growth of the insurance industry, for the benefit of the common man, and to provide long- term funds for accelerating growth of the economy. To ensure that insurance customers receive exact, clear and correct information about products and services and make them aware of their responsibilities and duties in this regard.

Composition of Authority
As per the section 4 of IRDA Act' 1999, Insurance Regulatory and Development Authority (IRDA, which was constituted by an act of parliament) specify the composition of Authority The Authority is a ten member team consisting of (a) a Chairman; (b) five whole-time members; (c) four part-time members, (all appointed by the Government of India)

Functions of IRDA
Registration (licensing) including renewal of registration of insurance companies. Licensing of insurance intermediaries such as agents, surveyors and loss assessors, third party administrators, brokers etc. official approval of agents training institutions. Monitoring all non-tariff products including pricing of products, terms and conditions thereof, etc

 Supervision of the functioning of the companies and intermediaries including review of company annual statements. Formulation of regulations. Enforcement of discipline. Consumer education and assistance.

IRDAs Regulatory Framework

Insurance Companies Third party administrators

Agents

Surveyors and loss assessors

IRDA

Insurance Advisory committee

Insurance brokers

Insurance ombudsman

Insurance associations/ insurance councils

Tariff Advisory committee

FEATURES OF IRDA, ACT

ACT TO ESTABLISH THE REGULATORY AUTHORITY:
Act is to establish authority which will: Protect the interest of holders of insurance policies; Regulate, promote & ensure orderly growth of insurance industry; Section 3 of the Act, provides that the authorities shall be a body corporate with the name The Insurance Regulatory Authority that have a common seal.

INSURANCE ADVISORY COMMITTEE:

Sec.25 of the Act provides that an insurance advisory committee consisting of not more than 25 members. The members will represent the interest of commerce, industry, transport, agriculture, agents etc. the chairperson and the members of the authority shall be ex officer members of the committee.

ENDING THE MONOPOLY OF LIC AND GIC:

Sec 30, 31of the IRDA Act have amended certain provisions of Insurance Act 1972. These amendments have ended the exclusive privilege of LIC,GIC and its subsidiaries to carry on life and general insurance respectively.

THE INSURANCE BUSINESS OPENED TO INDIAN COMPANIES ONLY:

An Indian insurance company has been defined in sec 2 as an insurer being a company: Formed and registered under companies act 1956. Aggregate holding of equity shares of foreign company donot exceed 26% of paid up equity share capital of Isndian INS.

RENEWAL OF REGISTRATION:
An insurer who has been granted a certificate shall make application in the form of IRDA/R5 for renewal of certificate before the 31st December each year with the evidence of payment of fee.

CAPITAL ADEQUACY REQUIREMENT:

Paid up equity capital of 100 crores in case of person carrying life insurance and general insurance business. Paid up equity capital of Rs.200 crores in case of company carrying business as re-insurer.

DEPOSITS:
keep the deposits with RBI either cash or approved securities Life insurance business- not exceeding 10 crores General insurance business-not exceeding 10 crores Re-insurance business-a sum of Rs.20 crores

INVESTMENT OF ASSETS:
Sec. 27 provides that atleast 50% of the funds shall be parked in the govt. securities & insurer can invest upto 20%of their funds in corporate debts in addition to 15% in market investment. Infrastructure has been included in the social sector, where the companies have to mandatorily invest atleast 15% of their funds.

POWER OF INVESTIGATION AND INSPECTION:

The authority may by an order direct any person to investigate the affairs of the insurer and to report to it.it may take the services of auditor or actuary for the purpose of assisting him in any investigation.

TARIFF ADVISORY COMMITTEE:

Tariff advisory committee shall control and regulates the rates, advantages, term and conditions that may be offered by that insurer in respect of general insurance business.

LICENSING OF SURVEYORS AND LOSS ASSESSORS:

It provides that a person shall not act as surveyors or loss assessors in respect of general insurance unless he holds a valid license issued to him by the authority.

SUFFICIENCY OF THE ASSETS:

An insurer should maintain excess of assets over liabilities. The solvency margin shall be the highest of the following : 50 crore. Sum equivalent to 20% of net premium income. A sum equivalent to 30% of net incurred claims.

NO RISK TO ASSUME UNLESS PREMIUM RECEIVED IN ADVANCE:

An insurance company shall not asssume any risk in respect of any insurance business of which premium payable is received by him or is guarrented to be paid by a person within such time or unless and until deposit of such amount is made in advance in the prescribed manner.

REINSURANCE:
If the insurers find that they have entered into a contract of insurance which is an expensive proposition for them or if they wish to minimise the clesrences of any possible loss, without at the same time ,giving up the contract resort it to have reinsurance.