Government of India Volume I: Analysis and Recommendations

ANNEXES
19. Role of surveyors:
(a) The Indian Institute of Insurance Surveyors and Loss Assessors should be given
statutory recognition as a professional body responsible for the licensing and
supervision of surveyors and loss assessors.
(b) In order to protect the interests of consumers, the legal framework should allow
them to appoint a surveyor in addition to the surveyor required to be appointed
by the insurer. The insurer will be required to consider both reports
before making a decision on the claim.
20. The law should empower the regulator to specify the types of permitted and restricted
assignments of insurance policies. The insurer will not have the discretion
to refuse to record an assignment that is made in accordance with the regulations.
Competition issues
21. The legal framework governing LIC should be at par with the laws applicable to all
other life insurance companies. In particular, there should be no sovereign guarantee
for the policies of LIC. The status of LIC should be changed from a statutory corporation
to a Government company governed under standard company law provisions.
22. There is a need for encouraging competition in the reinsurance sector by adopting
the following measures:
(a) do away with the mandatory requirement placed upon general insurance
companies to reinsure a portion of their business with General Insurnace Council
(GIC);
(b) remove barriers which prevent Indian insurance companies from doing business
with global reinsurers, subject only to prudential regulation requirements;
and
(c) create an enabling framework for the entry of global reinsurance firms, including
Lloyds, in the Indian reinsurance sector.
23. Competition policy should play an effective role in ensuring that government schemes
do not create an uneven playing field between state-owned and private insurance
companies.
Resolution and systemic relevance
24. The law should contain appropriate resolution mechanisms to deal with failing
insurance firms, including provisions for enhanced supervision and the option of
transferring the business of the failing insurer to a solvent insurer. These mechanisms
should be applicable to both life and non-life insurers.
25. There is a need to create a compensation scheme to protect policyholders from
the inability of an insurer to meet its financial obligations and to minimise the taxpayer’s
exposure to the failure of insurance firms. The design of the policyholder
compensation scheme should be decided under the resolution framework being
designed by the Commission.
26. It should be the regulator’s responsibility to assess the systemic importance of individual
insurance firms. Additional supervisory and resolution tools will need to
be employed in respect of those insurance companies that are found to be systemically
important.
Unregulated areas of insurance
27. Establishments covered by ESIC should have the option to opt out of the medical
benefit facilities provided under the scheme and obtain group health insurance
coverage offered by an insurance company, if they are able to obtain similar benefits
at a similar cost . In such cases, a proportionate amount of the total contribution
payable to ESIC that relates to the medical benefits provided under the scheme will
be used as the premium for obtaining the insurance policy.
FINANCIAL SECTOR LEGISLATIVE REFORMS COMMISSION 169