Irda

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AIM: Quick disposal of the grievances of the insured customers and to lighten their obstacles.

APPOINTMENT: Appointed by the committee consisting of Chairman IRDA, Chairman LIC, Chairman GIC and a representative of the Central Government

QUALIFICATION REQUIREMENTS: Ombudsman committee is composed of members belonging to Insurance Industry, Civil Services and Judicial Services.

TENURE: 3 years or age of 65 whichever is earliest.

As of now there are twelve offices of the ombudsman located in Bhopal, Bhubaneswar, Cochin, Guwahati,Chandigarh, New Delhi, Chennai, Kolkata, Ahmedabad, Lucknow, Mumbai, Hyderabad.

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.

Award (solution) is to be passed within 3 months of receiving of complaint. If the party is not satisfied with the quality of response they have the freedom to present their case to the higher ups like the consumer forums and courts of law.

APPLICABILITY OF THE ACT.

The Act is applicable to the whole of the insurance sector and all parties related.

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IRDA AND LIFE INSURANCE

The IRDA has improvised numerous of the existing guidelines to ensure that the customer is treated with utmost care.

The following are the core elements of the revision done by IRDA:

Transparency

In order to bring transparency, the regulator has ensured that all insurance products provide the prospective policyholder with a customised benefit illustration on guaranteed and non-guaranteed benefits at gross investment returns of 4% and 8% respectively for all products.

Another step is to set up a "With Profit Committee", at the board level of every insurance company. The committee will approve asset mix and expense allocated for and investment income earned on the fund. This will lead to improved and more transparent corporate governance in the administration of participating or 'with profit' policies.

Capital guarantee and more bonuses

The regulator has directed that the minimum sum for all policies will now be 10 times of the annual premium for people below 45 years and above 7 times for 45 years and above. At any point, the death benefit will have to be at least 105% of all premiums paid till date. In this way, the regulator aims to promote life insurance for its core value of protection.

Higher surrender value

As per the new norms, traditional policies will now have better surrender value after the completion of 5 years. If the policyholder has to exit their policy before completion of policy tenure, he/she will be entitled to a higher surrender value especially in the early part of the policy tenure. Currently, there are no preset rules. In the new regime, the minimum guaranteed surrender value will be 30% of all premiums paid going up to 90% of the premiums paid in the last two policy years.

Long-term focus

In order to re-emphasize the long term nature of the life insurance business the guidelines have also correlated agents' Compensation to the policy terms. Short-term policies will now have a lower commission than traditional products with a policy term of 12 years or more. In case of regular premium insurance policies, a policy with a premium paying term (PPT) of five years will limit commissions to 15% in the first year, 7.5% in the second and third year and 5% subsequently. Products with PPT of 12 years or more will have first year commissions up to 35% in case the company has completed 10 years of existence and 40% for the company in business for less than 10 years.

IRDA AND FIRE INSURANCE

According to IRDA

“Fire Insurance Business” means business of effecting, otherwise than incidentally to some other class of insurance business, contracts of insurance against loss by or incidental to fire or other occurrence customarily included among the risks insured against in fire insurance policies.

In 2015, fire insurance policies were revamped by the IRDA as below:

- Modification in the pricing policy of fire insurance.

- Industry-wise loss cost must be the starting point and should be considered for pricing a product, including “burning cost”.

- The result was most corporate customers had seen a 3-4 times increase from current fire policy rates, on average.

- The lowest increase was about 99% while the highest was over 1400%.

IRDA AND MARINE INSURANCE

The definition of Marine Insurance given by IRDA is as follows:

“Marine Insurance Business” means the business of effecting contracts of insurance upon vessels of any description, including cargoes, freights and other interests which may be legally insured, in or in relation to such vessels, cargoes and freights, goods, wares, merchandise and property of whatever description insured for any transit by land or water, or both, and whether or not including warehouse risks or similar risks in addition or as incidental to such transit, and includes any other risks customarily included among the risks insured against in marine Insurance policies.

Not much is actually modified by the IRDA in the matters relating to marine insurance except for deposits.

DEPOSITS:

If the business is to be done in marine Insurance only & relates exclusively to country craft or its cargo or both the amount to be deposited Rs.1,00,000/- (Rs.1 Lakh) only.

IRDA AND HEALTH INSURANCE

Health insurance sector has witnessed steep growth during the past few years in India.

The main aim of health insurance industry is not to sell and market health insurance policies but also provide timely