financial sector assessment program

G V Rao -Presentation G V Rao -Presentation 11

Financial Sector Financial Sector Assessment Program Assessment Program

Implementation of Core Implementation of Core Principles 25, 27 and 28Principles 25, 27 and 28

2929thth December 2010 December 2010


What ICP coverage should What ICP coverage should mean?.mean?.

Possession of Authority/Implementation of Possession of Authority/Implementation of Principle. Resources/ Capacity- observance.Principle. Resources/ Capacity- observance.

Public consultation for transparency to make Public consultation for transparency to make new rules. new rules.

Accountability for action needed.Accountability for action needed. Assessing framework to indentify gaps in Assessing framework to indentify gaps in

consumer protection & market stability.consumer protection & market stability.( ( To provide industry/consumer perspectives).To provide industry/consumer perspectives).


ICP 25—Consumer ICP 25—Consumer Protection.Protection.

1. “ 1. “ SA sets minimum requirementsSA sets minimum requirements - - insurers & intermediaries dealing with insurers & intermediaries dealing with consumersconsumers..

2.“2.“Strengthen consumer confidence in Strengthen consumer confidence in market.market.

3.Treat consumers fairly—info’-wise.3.Treat consumers fairly—info’-wise.4.Good claim resolution process for 4.Good claim resolution process for

fairness.fairness.5.Access to information/consumer 5.Access to information/consumer

rights/obligations.rights/obligations.


Essential criteria & Essential criteria & Evidence.Evidence.

1. Are insurers/intermediaries dealing with 1. Are insurers/intermediaries dealing with consumers with due skill, care, diligence?consumers with due skill, care, diligence?

2. Do insurers have policies & systems & 2. Do insurers have policies & systems & provide training to employees on these?provide training to employees on these?

3. Requirements to seek info’ from 3. Requirements to seek info’ from consumers. Are they outdated?consumers. Are they outdated?

4. Norms for effective, fair, simple, 4. Norms for effective, fair, simple, accessible & equitable claim process, accessible & equitable claim process, need review?need review?


One view?One view? IRDA has legal framework to implement.IRDA has legal framework to implement. IRDA to record procedures & IRDA to record procedures &

accountability to accountability to enable insurers & enable insurers & intermediaries to achieve set intermediaries to achieve set requirements. requirements. Within?Within?

Consumers to know what these are?Consumers to know what these are? How is that done now by each?How is that done now by each? Consumer ignorance of protection-huge?Consumer ignorance of protection-huge? IRDA- oversee insurers implement goals.IRDA- oversee insurers implement goals.


Claim processing—change Claim processing—change proposed?proposed?

Claim two aspects—liability & quantum.Claim two aspects—liability & quantum. Both are decided in one go & a long Both are decided in one go & a long

time.time. Determine liability first; arbitration helps.Determine liability first; arbitration helps. Empower customer to negotiate claim?Empower customer to negotiate claim? No surveyors fined for breach of COC?No surveyors fined for breach of COC? Insurers now dictate on assessment prior Insurers now dictate on assessment prior

to accept liability of claim.to accept liability of claim. Modify current claim policy condition.Modify current claim policy condition.


Suggestion on Licensed Suggestion on Licensed Surveyors.Surveyors.

1.1. Like in TPA, Agency, have written Like in TPA, Agency, have written contracts between insurers & contracts between insurers & surveyors.surveyors.

2.2. Surveyors should be sued for delays, Surveyors should be sued for delays, wrong & faulty discharge of functions wrong & faulty discharge of functions & duties. & duties.

3.3. Surveyors like brokers must have PI Surveyors like brokers must have PI for at least Rs 1 crore. So should TPAsfor at least Rs 1 crore. So should TPAs—all outsourced outfits. —all outsourced outfits.


ICP 27- Frauds.ICP 27- Frauds. SA requires insurers & intermediaries take SA requires insurers & intermediaries take

measures to prevent, detect and remedy measures to prevent, detect and remedy insurance fraud.insurance fraud.

To communicate with other SA to detect.To communicate with other SA to detect.If there are specific legal provisions-fraud?If there are specific legal provisions-fraud?All in insurance chain are likely perpetrators.All in insurance chain are likely perpetrators.Fraud results reputational, financial damage Fraud results reputational, financial damage

and adds to social & economic costs. and adds to social & economic costs.


Essential Criteria.Essential Criteria. SA has powers & resources combat SA has powers & resources combat

fraud?fraud? Does legislation cover—definition fraud?Does legislation cover—definition fraud? High business integrity standards.High business integrity standards. SA requires insurers etc. devote SA requires insurers etc. devote

resources.resources. Counter-fraud training to staff.Counter-fraud training to staff. Co-operates with other SAs. Co-operates with other SAs.


Comments on Fraud.Comments on Fraud. Fraud—is it defined in Indian law?Fraud—is it defined in Indian law? Vigilance covers only PSU internal staff.Vigilance covers only PSU internal staff. Private sector to have CVOs? GI Council?Private sector to have CVOs? GI Council? Surveyors & Brokers to have CVOs, as Surveyors & Brokers to have CVOs, as

they are organized as Associations.they are organized as Associations. Insurers to have counter-fraud training?Insurers to have counter-fraud training? Deliberate breaches of current safety Deliberate breaches of current safety

legislation—is it fraud on insurers?legislation—is it fraud on insurers?


AML, combating Terrorism-AML, combating Terrorism-28.28.

SA requires, at least life insurers and SA requires, at least life insurers and others offering investment products others offering investment products andand

intermediaries to detect, prevent& intermediaries to detect, prevent& report ML & financing of terrorism—report ML & financing of terrorism—Financial Action Task Force.Financial Action Task Force.


Essential Criteria.Essential Criteria. FATF recommendations.FATF recommendations. AML/CFT requirements.AML/CFT requirements. AML regulations.AML regulations. Sensitization of regulatory framework.Sensitization of regulatory framework. Maintenance of data for 5 years.Maintenance of data for 5 years. Insurers to develop procedures, Insurers to develop procedures,

systems & training to detect AML/CFT.systems & training to detect AML/CFT.


Systems, processes & Systems, processes & accountability?accountability?

To be listed by each insurer and To be listed by each insurer and other entities—and how these are other entities—and how these are supervised, audited, and action supervised, audited, and action taken for implementation.taken for implementation.


Last slide.Last slide. Consumer protection needs fresh look.Consumer protection needs fresh look. Insurer procedures must be self-Insurer procedures must be self-

contained.contained. Insurers to play bigger role than now.Insurers to play bigger role than now. GI council has to take on accountability.GI council has to take on accountability. Surveyors and claim process need relook.Surveyors and claim process need relook. Private players to have Vigilance outfits.Private players to have Vigilance outfits. IRDA to develop inspection expertise for IRDA to develop inspection expertise for

ICP implementation—work with others.ICP implementation—work with others.

financial sector assessment program

Documents