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Showing posts with label insurance. Show all posts
Showing posts with label insurance. Show all posts

IRDA : Insurance Regulatory and Development Authority


The Insurance Regulatory and Development Authority of India (IRDAI) is an autonomous, statutory body tasked with regulating and promoting the insurance and re-insurance industries in India.

It was constituted by the Insurance Regulatory and Development Authority Act, 1999, an Act of Parliament passed by the Government of India.

Headquarters are in Hyderabad, Telangana, where it moved from Delhi in 2001.

IRDAI Regional Offices are at New Delhi & Mumbai.


History :

Following the recommendations of the Malhotra Committee, in 1999 the Insurance Regulatory and Development Authority (IRDA) was constituted to regulate and develop the insurance industry and was incorporated in April 2000.

Objectives of the IRDA include promoting competition to enhance customer satisfaction with increased consumer choice and lower premiums while ensuring the financial security of the insurance market.

The IRDA opened up the market in August 2000 with an invitation for registration applications; foreign companies were allowed ownership up to 26 percent.

The authority, with the power to frame regulations under Section 114A of the Insurance Act, 1938, has framed regulations ranging from company registrations to the protection of policyholder interests since 2000.

In December 2000, the subsidiaries of the General Insurance Corporation of India were restructured as independent companies and the GIC was converted into a national re-insurer.

Parliament passed a bill de-linking the four subsidiaries from the GIC in July 2002. There are 28 general insurance companies, including the Export Credit Guarantee Corporation of India and the Agriculture Insurance Corporation of India, and 24 life-insurance companies operating in the country.

With banking services, insurance services add about seven percent to India’s GDP.

In 2013 the IRDAI attempted to raise the foreign direct investment (FDI) limit in the insurance sector to 49 percent from its current 26 percent.

The FDI limit in the sector was raised to 100 percent according budget 2019.


Structure :

Section 4 of the IRDAI Act 1999 specifies the authority's composition.

 It is a ten-member body, appointed by the government of India.

 It is a ten-member body consisting of a chairman, five full-time and four part-time members.

 At present (1 Sept, 2018), the authority is chaired by Dr. Subhash Chandra Khuntia

 Its full-time members are Mrs T.L.Alamelu, K.Ganesh, Pournima Gupte, Praveen Kutumbe and Sujay Banarji.


Functions :

 The functions of the IRDAI are defined in Section 14 of the IRDAI Act, 1999, and include:

 Issuing, renewing, modifying, withdrawing, suspending or cancelling registrations.

 Protecting policyholder interests.

 Specifying qualifications, the code of conduct and training for intermediaries and agents.

 Specifying the code of conduct for surveyors and loss assessors.

 Promoting efficiency in the conduct of insurance businesses.

 Promoting and regulating professional organisations connected with the insurance and re-insurance industry.

 Levying fees and other charges.

 Inspecting and investigating insurers, intermediaries and other relevant organisations.

 Regulating rates, advantages, terms and conditions which may be offered by insurers not covered by the Tariff Advisory Committee under section 64U of the Insurance Act, 1938 (4 of 1938).

 Specifying how books should be kept.

 Regulating company investment of funds.

 Regulating a margin of solvency.

 Adjudicating disputes between insurers and intermediaries or insurance intermediaries.

 Supervising the Tariff Advisory Committee.

 Specifying the percentage of premium income to finance schemes for promoting and regulating professional organisations.

 Specifying the percentage of life- and general-insurance business undertaken in the rural or social sector.

 Specifying the form and the manner in which books of accounts shall be maintained, and statement of accounts shall be rendered by insurers and other insurer intermediaries.


Last updated on: 02/10/2019

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Important notes - Insurance


1) LIC established on September 1st, 1956 with five crores.

2) LIC Head Quarters - Mumbai

3) LIC celebrated 50th Anniversary on September 1st, 2006.

4) Chegla Committee gave suggestions to LIC.

5) LIC has:
 - 8 Zonal offices
 - 113 Divisional Offices
 - 2048 branch offices
 - LIC Building is "Yogakshemam"
 - LIC Anthem is " Nigam Geetham"

6) LIC is NBFC ( Non Banking Financial Corporation )

7) LIC doesn't give insurance to Agriculture and Air Force

8) General Insurance Corporation - GIC
 - Established in 1972
 - Business started on January 1st 1973.

9) General Insurance Corporation has four subsidiary organs. They are :
 - National Insurance Company Limited (Kolkata, 103 years)
 - New India Assurance Company Limited (HQ - Mumbai)
 - Oriental Insurance Company Limited (New Delhi)
 - United India Insurance Company Limited (Chennai)

10) IRDA is "Insurance Regulatory Development Authority"
 - Established on April 19th, 2000.
 - Recommended by R.N. Malhotra committee in 1993.
 - Chairman is " J. Hari Narayan"

11) Functions of IRDA
 - concentrates on LIC development.
 - protects the interest of policy holders.

Last updated on: 02/10/2019

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History of Life Insurance in India


Life Insurance sector deals with the risks and the accidents affecting the life of the customer. Alongside, this insurance policy also offers tax planning and investment returns.

There are various types of life Insurance Policies in India :
a.) Endowment Policy
b.) Whole Life Policy
c.) Term Life Policy
d.) Money-back Policy
e.) Joint Life Policy
f.) Group Insurance Policy
g.) Loan Cover Term Assurance Policy
h.) Pension Plan or Annuities
i.) Unit Linked Insurance Plan

Important timelines in the Indian life insurance :

* 1818: establishment of the Oriental Life Insurance Company in Kolkata, the business of Indian life insurance started in the year 1818. This company failed in 1834.
* 1829: the Madras Equitable begun transacting life insurance business in the Madras Presidency.
* 1870: enactment of the British Insurance Act and in the last three decades of the nineteenth century, the Bombay Mutual (1871), Oriental (1874) and Empire of India (1897) were started in the Bombay Residency.
This era, however, was dominated by foreign insurance offices which did good business in India, namely Albert Life Assurance, Royal Insurance, Liverpool and London Globe Insurance and the Indian offices were up for hard competition from the foreign companies.
* 1912: The Indian Life Assurance Companies Act, the first statutory measure to regulate life business was enacted.
* 1914: the Government of India started publishing returns of Insurance Companies in India.
* 1928: Indian Insurance Companies Act was enacted. This act enabled the Government to collect statistical information about both life and non-life business transacted in India by Indian and foreign insurers including provident insurance societies.
* 1938: Insurance Act, 1938 amended previous act and consolidated it with comprehensive provisions for effective control over the activities of insurers.
* 1950: The Insurance Amendment Act abolished Principal Agencies. However, due to fierce competition and allegations of unfair trade practices, The Government of India, decided to nationalize insurance business.
* 1956: 245 Indian and foreign insurers and provident societies were taken over by the central government and they got nationalized. LIC was formed by an Act of Parliament, viz. LIC Act, 1956. It started off with a capital of Rs. 5 crore and that too from the Government of India.


Last updated on: 02/10/2019

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Insurance


What is Insurance ?

Insurance is a contract, represented by a policy, in which an individual or entity receives financial protection or reimbursement against losses from an insurance company.

Insurance is a means of protection from financial loss. It is a form of risk management, primarily used to hedge against the risk of a contingent or uncertain loss.

An entity which provides insurance is known as an insurer, insurance company, insurance carrier or underwriter. A person or entity who buys insurance is known as an insured or as a policyholder.

The insurance transaction involves the insured assuming a guaranteed and known relatively small loss in the form of payment to the insurer in exchange for the insurer's promise to compensate the insured in the event of a covered loss.

Methods for transferring or distributing risk were practiced by Chinese and Babylonian traders as long ago as the 3rd and 2nd millennia BC, respectively.

The first life insurance policies were taken out in the early 18th century.

The first company to offer life insurance was the Amicable Society for a Perpetual Assurance Office, founded in London in 1706 by William Talbot and Sir Thomas Allen.

There are different kinds of insurance like Health Insurance, Auto insurance, Fire insurance, Property insurance, etc to protect against varied risks.

However insurance is divided into two broad Categories:
1.) Life Insurance
2.) General Insurance

History of Insurance in India :

In India, insurance has a deep-rooted history. It finds mention in the writings of Manu (Manusmrithi), Yagnavalkya (Dharmasastra) and Kautilya (Arthasastra).

The writings talk in terms of pooling of resources that could be re-distributed in times of calamities such as fire, floods, epidemics and famine.

This was probably a pre-cursor to modern day insurance. Ancient Indian history has preserved the earliest traces of insurance in the form of marine trade loans and carriers’ contracts.

Insurance in India has evolved over time heavily drawing from other countries, England in particular.


Last updated on: 02/10/2019

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