CHAMELIDEVI INSTITUTE OF

MANAGEMENT & RESEARCH

Presentation On
IRDA Act, 1999

Guided by : Presented By :
Prof. Manish Joshi Amit Sharma
Pankaj Kukreja
December 8, 2021 PGDM IIInd
 IRDA
( Insurance Regulatory
&
Development Authority )
Road Map
 History

 Introduction of IRDA

 Registration under IRDA

 Cancellation of registration

 Expectations from IRDA

 Duties, Powers and Functions of IRDA

Contd..
 Definition Of Insurance

 Indian Insurance Company

 Various challenges faced in Insurance Markets

 Parties

 Restriction On name of Insurer

 Principles of Insurance

 Types of Insurance
 History
(Governed by Insurance Act -1938,Now By –
IRDA Act-1999)

 Methods of transferring or distributing risk were practiced by Chinese and

Babylonian traders as long ago as the 3rd and 2nd millennia BC.

 The Greeks and Romans introduced the origins of health and life

insurance c. 600 AD.

 India:- First Indian insurance company was Calcutta Insurance Company

which setup in 1798 exclusively for Europeans. The Bombay Life

Assurance Society formed in 1870 Insured Indians first time.

Contd..
 Indian life assurance companies act ,1912 was first
statutory act to regulate life business.
 In 1928 the Indian insurance companies act enacted.
 In 1938 insurance act amended to consolidate
legislation and effective control over the activities of
insurer.
 19th Jan.1956 LIC is formed by absorbing 154
Indian,16 non-Indian insurer and 75 provident
societies.
 Contd..
GIC was Incorporated as a company in Year 1971 . In 1972
General Insurance Business(Nationalization) Act passed with
effect from 1st Jan 1973 GIC is formed by amalgamation of 107
insurer and 4 company formed named as…
 National Insurance Co. Ltd.
 The New India Assurance Co. Ltd.
 The Oriental Insurance Co. Ltd.
 The United India insurance co. Ltd.
IRDA
 In 1993 Government setup a committee under
chairmanship of R.N. Malhotra ,former Governor of
RBI for 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 up
capital and can operate with an Indian company.
Composition of Authority under IRDA
Act, 1999
 The Authority is a ten member team
consisting of
    (a)    a Chairman;
    (b)    five whole-time members;
    (c)    four part-time members
Mr. Hari Narayan
Chairman, IRDA
Registration under IRDA
The application accompanied by:-
 A certified copy of memorandum and article of
association.
 Name, address and occupation of Directors.
 A statement of the classes of insurance business
done/to be done along with a statement of deposits
with the Reserve Bank of India.
Cont…
 The receipt showing payment of fee (as
determined by IRDA regulation) not
exceeding Rs.50,000 for each class of
business.
 Such other document as may be specified by
IRDA.
Cancellation of Registration
 He fails to comply with the requirement of deposit
with the RBI.
 He fails to comply with the requirement relating to
sufficiency of assets(assets-liabilities)
 The whole of his deposit has been refunded to him
on court order when he cease to carry on business
and all liabilities has been satisfied/provided for.
Cont…
 He defaults in complying with or contravenes
any requirement of insurance act/any rule/order
made or direction issued there under,
 The IRDA has reason to believe that any claim
are unpaid for 3 month after final court order in
India.
 He carries on any other business,
Cont…
 His business has been transferred to any other
person/amalgamated with any other insurer.
 He defaults in complying with any directions
issued/order maid by IRDA .
 He default in complying with or contravenes any
requirement of Companies Act/LIC Act/GIC
Act/FEMA etc
 Expectations from IRDA
 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 set, promote, monitor and enforce high standards of integrity,

financial soundness, fair dealing and competence of those it regulates..

 Contd..
 To ensure that insurance customers receive precise, clear and correct

information about products and services and make them aware of their

responsibilities and duties in this regard.

 To ensure speedy settlement of genuine claims, to prevent insurance frauds and

other malpractices and put in place effective grievance redressal machinery.

 To promote fairness, transparency and orderly conduct in financial markets

dealing with insurance and build a reliable management information system to

enforce high standards of financial soundness amongst market players.

Duties, Powers and Functions of
IRDA
 To regulate, promote and ensure orderly growth of the insurance business

and re-insurance business.

 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;

Cont….
 Specifying requisite qualifications, code of
conduct and practical training for intermediary or
insurance intermediaries and agents.
 Specifying the code of conduct for surveyors and
loss assessors.
 Promoting efficiency in the conduct of insurance
business.
 Cont..
 Levying fees and other charges for carrying out the purposes of this
Act
 Calling for information from, undertaking inspection of, conducting
enquiries and investigations including audit of the insurers,
intermediaries.
 Control and regulation of the rates, advantages, terms and
conditions that may be offered by insurers in respect of general
insurance business .
 Cont…
 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.
 Regulating investment of funds by insurance companies.
 Regulating maintenance of margin of solvency
 Adjudication of disputes between insurers and
intermediaries or insurance intermediaries.
 Cont…
 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 and conditions to be

offered in connection with insurance policies, together with a certificate

in connection with life business by an actuary.

Definition of Insurance
 Insurance is pooling of risks. In contract of
insurance ,the insurer (insurance company)
agree/undertakes, in consideration of a sum of
money (premium), to make good the loss
suffered by the insured against a specified risk
such as fire , accident etc or any contingency.
Cont…
 In Dec. 2000 subsidiaries of GIC were restructured as
independent company. And in July 2002 parliament
passed a bill of De-linking of four subsidiaries of GIC.
 Today there are 14 General insurance companies
including ECGC & Agricultural insurance corporation of
India and 14 life Insurance company operating in India.
 Indian Insurance company

 A company defined and registered under the

companies act in which aggregate holding of equity
shares by a foreign company either by itself or by
nominees/subsidiaries ,does not exceed 26% paid
up equity capital and whose sole purpose is to carry
on life/general/reinsurance business
 Various challenges faced in
Insurance Markets are

1. Industry Challenges
 Shifting consumer requirements( everyone wants
products tailored to them, customization)
 Heightened competition.
 Global economic meltdown.

.
Contd..
2. Business Challenges

Distribution Channel pressures and emerging consumer

demands for mass customization and hydrid products are
moving rapid product development from being a competitive
advantage to a necessity.

3. Process Challenges

Lack of stream lined processes, change management,

automated processes
Parties
There are two parties to an Insurance contracts
as:-
 Insurer/assurer/underwriter,
 Insured/assured/beneficiary
Insurer
(a) any individual or unincorporated body of individuals or body
corporate incorporated under 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 or is domiciled in

(iii) with the object of obtaining insurance business, employs a

representative, or maintains a place of business, in India
Contd…
 (b) Any body corporate carrying on the business
of insurance, which is a body corporate
incorporated under any law for the time being in
force in or stands to any such body corporate in the
relation of a subsidiary company within the
meaning of the Indian Companies Act, 1913
Insurance agent
 Means an insurance agent licensed under
section 42 who receives or agrees to receive
payment by way of commission or other
remuneration in consideration of his
soliciting or procuring.
Policy
 The document laying down the term of contract
is called (insurance) policy.
Principal Agent
 A person who is in consideration of any
commission,--
 (i) performs any administrative and organising
functions for the insurer, and
 (ii) procures general insurance business whether
wholly or in part by employing or causing to be
employed insurance agents on behalf of the insurer.
Special agent
 A person who is consideration of any
commission, procures life insurance business for
the insurer whether wholly or in part by
employing or causing to be employed .
Restriction on name of insurer

 An insurer shall not be registered by a name

identical with that by which an insurer in
existence is already registered, or so nearly
resembling that name .
Principles of Insurance
 Principle of Insurable interest.
 Principle of Utmost good faith
 Principle of Indemnity.
 Principle of Contribution.
 Principle of Subrogation.
Other Type of insurance
 Property insurance
 Automobile insurance
 Aviation insurance
 Boiler insurance
 Builder's risk insurance
 Crop insurance
 Earthquake insurance
Cont…
 Flood insurance
 Home insurance
 Landlord insurance
 Marine insurance
 Terrorism insurance etc.
Life insurance business
 Business of effecting contracts of insurance upon
human life, including any contract whereby the
payment of money is assured on death (except
death by accident only) or the happening of any
contingency dependent on human life.
Type of Life Insurance Polices
 Endowment Policy
 Term insurance Policy
 Whole Life Policy
 Limited Payment Life Policy
 Joint Life Policy
 Convertible Whole Life Policy
 Annuities
General insurance
 It means fire, marine / miscellaneous
insurance business whether carried on
singly or in combination with one/more of
them
 Types of General Insurance
Fire insurance Policies:
(a) Specific Policy

(b) Comprehensive Policy

(c) Valued Policy

(d) Unvalued Policy

(e) Floating Policy

(f) Replacement or Reinstatement Policy

(g)Blanket Policy
 Marine Insurance Policies
 (a) Voyage Policy
 (b) Time Policy
 (c) Mixed Policy
 (d) Valued Policy:
 (e) Open and Unvalued Policy
 (f) Floating Policy
Health/ medical insurance:
This cover only two type of
benefits
 Re-imbursement of medical
expenses related to specific
diseases and
 Hospitalization
Some of policies are as
 Individual/Group Mediclaim policy
 Bhavishya Arogya policy
 Jan Arogya Bima
 Overseas medical cover
List of Life Insurers
 Bajaj Allianz Life Insurance Company Limited
 Birla Sun Life Insurance Co. Ltd
 HDFC 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.
Cont…
• Kotak Mahindra Old Mutual Life Insurance Limited
• 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
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

Cont…
 National Insurance Company Ltd
 New India Assurance
 Oriental Insurance Company
 Reliance General Insurance
 Royal Sundaram Alliance Insurance
 Shriram General Insurance Company Limited
 Tata AIG General Insurance
Cond.
• Future Generali Life Insurance
• IDBI Fortis Life Insurance
• HDFC Ergo General Insurance Company
• ICICI Lombard General Insurance
• IFFCO Tokio General Insurance
• Universal Sompo General Insurance Co. Ltd
• United India Insurance
Queries are invited
 Thank You
for your attention