INTRODUCTIONINTRODUCTIONThe IRDA (Insurance regulatory and development authority) is the

national regulatory body for insurance industry both life and non life under the auspices Government of India, situated in Hyderabad.

Composition of Authority under IRDA Act, 1999As 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)

MISSIONMISSION

► To protect the interests of the policyholders.To protect the interests of the policyholders.► To promote, regulate and ensure orderly growth of the insurance To promote, regulate and ensure orderly growth of the insurance

sector and for the matters connected therewith or incidental sector and for the matters connected therewith or incidental thereto.thereto.

► Conduction of insurance sector in India in an ethical manner.Conduction of insurance sector in India in an ethical manner.

ROLE OF IRDAROLE OF IRDA

Section 14 of IRDA Act, 1999 lays down the duties, powers and functions of IRDA.

1. Subject to the provisions of this Act and any other law for the time being in force, the Authority shall have the duty to regulate, promote and ensure orderly growth of the insurance business and re-insurance business.

2. Without prejudice to the generality of the provisions contained in sub-section (1), the powers and functions of the Authority shall include:

a. issue to the applicant a certificate of registration, renew, modify, withdraw, suspend or cancel such registration;

b. 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;

c. specifying requisite qualifications, code of conduct and practical training for intermediary or insurance intermediaries and agents;

d. specifying the code of conduct for surveyors and loss assessors;

e. promoting efficiency in the conduct of insurance business;

f. 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;

g. regulating investment of funds by insurance companies;

h. regulating maintenance of margin of solvency;i. adjudication of disputes between insurers and intermediaries or

insurance intermediaries;j. supervising the functioning of the Tariff Advisory Committee; k. Regulating investment of funds by insurance companies; l. Regulating maintenance of margin of solvency;m. Adjudication of disputes between insurers and intermediaries or

insurance intermediaries;n. Specifying the percentage of premium income of the insurer to

finance schemes for promoting and regulating professional organizations referred to in clause

o. Specifying the percentage of life insurance business and general insurance business to be undertaken by the insurer in the rural or social sector;

p. Exercising such other powers as may be prescribed

SUPPORTING ORGANISATIONSSUPPORTING ORGANISATIONS1. 1. Tariff Advisory CommitteeTariff Advisory Committee

The main task of Tariff Advisory Committee is to regulate and The main task of Tariff Advisory Committee is to regulate and control the rates, benefits,control the rates, benefits,terms and conditions offered by life insurance companies in India.terms and conditions offered by life insurance companies in India.

2. 2. Insurance Association of IndiaInsurance Association of IndiaAll insurance companies in India are members of the InsuranceAll insurance companies in India are members of the InsuranceAssociation of India. It has two councils under its patronage, Association of India. It has two councils under its patronage, mainly mainly a. Life Insurance Council a. Life Insurance Council b. General Insurance Councilb. General Insurance Council

3. 3. OmbudsmenOmbudsmenOmbudsmen play important role in regulating and ensuring smooth Ombudsmen play important role in regulating and ensuring smooth functions of the insurance companies. They are appointed to functions of the insurance companies. They are appointed to address all complaints relating to settlements of claims. Anyone address all complaints relating to settlements of claims. Anyone having a grievance against an insurance company can approach having a grievance against an insurance company can approach Ombudsmen for redressal.Ombudsmen for redressal.

NEW GUIDELINES AND EFFECTSNEW GUIDELINES AND EFFECTS► Lock in for Five Years and Premium Payment TermLock in for Five Years and Premium Payment Term: :

Minimum lock-in period has been revised from the current 3 Minimum lock-in period has been revised from the current 3 years to 5 years and barring single premium policies, the years to 5 years and barring single premium policies, the minimum payment term has also been raised to 5 pay.minimum payment term has also been raised to 5 pay.

► Increase in Minimum Sum AssuredIncrease in Minimum Sum Assured: The minimum sum : The minimum sum assured multiple has been increased to 10 times for age at entry assured multiple has been increased to 10 times for age at entry below 45 years and 7 times for age at entry above 45 years. At no below 45 years and 7 times for age at entry above 45 years. At no time can the sum assured be less than 105 per cent of total time can the sum assured be less than 105 per cent of total premium paid including top ups. All top ups also must have life premium paid including top ups. All top ups also must have life insurance cover built into them.insurance cover built into them.

► Net Reduction in Yield for Every Year from Year 5: Net Reduction in Yield for Every Year from Year 5: This new This new guideline stipulates the maximum net reduction in yield every guideline stipulates the maximum net reduction in yield every year from 5th year. It is primarily an extension of the earlier year from 5th year. It is primarily an extension of the earlier stipulation of maximum net reduction in yield of 3% for policy stipulation of maximum net reduction in yield of 3% for policy term up to 10 years and 2.25% for policy term above 10 years.term up to 10 years and 2.25% for policy term above 10 years.

years.years.

► Cap on Discontinuance Charge: Cap on Discontinuance Charge: IRDA has introduced a cap on IRDA has introduced a cap on surrender charge, now termed as policy discontinuance charge, surrender charge, now termed as policy discontinuance charge, basis the year of discontinuance and annual premium. This basis the year of discontinuance and annual premium. This allows life insurers to charge only a small penalty on early allows life insurers to charge only a small penalty on early surrender of policy.surrender of policy.

► Modifications in Unit Linked Pension Products : Modifications in Unit Linked Pension Products : Partial Partial withdrawals in Unit Linked Pension products will not be withdrawals in Unit Linked Pension products will not be allowed. On maturity, one third of the corpus could be taken as allowed. On maturity, one third of the corpus could be taken as lump sum and rest must be used for buying annuities. This lump sum and rest must be used for buying annuities. This change will ensure a larger corpus is collected and used for change will ensure a larger corpus is collected and used for retirement planning and not for other life stage needs.IRDA has retirement planning and not for other life stage needs.IRDA has also made it mandatory that all unit linked pension products must also made it mandatory that all unit linked pension products must offer minimum guaranteed return which would be specified by offer minimum guaranteed return which would be specified by IRDA from time to time.Even spread of charges during the lock-IRDA from time to time.Even spread of charges during the lock-in period. The new guidelines stipulate that the overall charges in in period. The new guidelines stipulate that the overall charges in ULIPs should be spread evenly over the lock-in period of 5 ULIPs should be spread evenly over the lock-in period of 5 years.years.

IRDA IN NEWSIRDA IN NEWS4 sept 2012 Insurance regulator IRDA recently slapped a penalty of Rs 49 lakh on Tata-AIG Life

Insurance Company for violation of various regulatory norms.The Insurance Regulatory and Development Authority (IRDA) has found lapses in various

rules, including non-adherence to norms of referrals and preparation of financial statements, by the life insurance company.

"...I hereby direct the insurer (Tata-AIG Life Insurance Company) to remit the penalty of Rs 49 lakh debiting shareholder's account within 15 days," IRDA Chairman J Hari Narayan said in his order.

The penalty follows an on-site inspection of Tata-AIG in August, 2010, during which the regulator found violations of the provisions and guidelines of the Insurance Act.

The insurance company could not be contacted for comments.The regulator said Tata AIG Life has made certain payments to HSBC Bank and Citibank

banks in violation of IRDA's guidelines on Group Insurance policies.The life insurer, IRDA said, was also been found violating the provisions of the norms while

entering into referrals arrangement with non-banking entities and utilising unlicensed entities.

Further, the IRDA has found lapses in the business promotion expenses under the Corporate Agency guidelines

8 sept 20128 sept 2012Insurance regulator IRDA recently slapped a fine of Rs 22 lakh on Kotak Mahindra Old Insurance regulator IRDA recently slapped a fine of Rs 22 lakh on Kotak Mahindra Old

Mutual Life Insurance for violation of various norms, including payment of death claims.Mutual Life Insurance for violation of various norms, including payment of death claims."I direct the insurer (Kotak Mahindra Life) to remit the penalty of Rs 22 lakh by debiting "I direct the insurer (Kotak Mahindra Life) to remit the penalty of Rs 22 lakh by debiting

shareholder's account, within a period of 15 days," Insurance Regulatory and shareholder's account, within a period of 15 days," Insurance Regulatory and Development Authority (IRDA) Chairman J Hari Narayan said in an order.Development Authority (IRDA) Chairman J Hari Narayan said in an order.

Kotak Mahindra, the order said, violated the guidelines on group insurance policies by not Kotak Mahindra, the order said, violated the guidelines on group insurance policies by not paying the small value death claims directly to the beneficiary. The insurance company paying the small value death claims directly to the beneficiary. The insurance company routed the claims through the NGO, instead of paying it directly to the beneficiaries as routed the claims through the NGO, instead of paying it directly to the beneficiaries as required under the law.required under the law.

The insurance company, IRDA said, has violated the guidelines by not paying the death The insurance company, IRDA said, has violated the guidelines by not paying the death claims on grounds of non-submission of additional documents.claims on grounds of non-submission of additional documents.

"... It is held that the claim repudiations on the basis of non-submission of requirements called "... It is held that the claim repudiations on the basis of non-submission of requirements called for is violation (of regulation) ... and a penalty of Rs one lakh is imposed under the for is violation (of regulation) ... and a penalty of Rs one lakh is imposed under the Insurance Act," IRDA said.Insurance Act," IRDA said.

IRDA also advised Kotak Mahindra Life to revise its claim manual procedures in line with the IRDA also advised Kotak Mahindra Life to revise its claim manual procedures in line with the regulations.regulations.

The insurance regulator has also hauled up Kotak Mahindra Life for inserting a clause to deny The insurance regulator has also hauled up Kotak Mahindra Life for inserting a clause to deny death claims within 3 months from the date of policy in its group insurance schemes.death claims within 3 months from the date of policy in its group insurance schemes.

"The insurer is directed to reopen all such claims which are repudiated because of inclusion of "The insurer is directed to reopen all such claims which are repudiated because of inclusion of this lien clause and examine and decide on the same. The action taken be confirmed to the this lien clause and examine and decide on the same. The action taken be confirmed to the IRDA," the order said.IRDA," the order said.

IRDA also found Kotak Mahindra violating the rules with regard to reimbursement of IRDA also found Kotak Mahindra violating the rules with regard to reimbursement of administrative expenses to master policyholders many of whom were acting as its administrative expenses to master policyholders many of whom were acting as its corporate agents.corporate agents.