annual report 2008-09 - IRDA

ANNUAL REPORT 2008-09
through a third party certification model using
Chartered Accountant firms.
Further, IRDA issued guidelines on the scope for
Internal and Concurrent Audit for investment
operations of insurance companies to monitor
investments of both Traditional and Unit Linked
portfolio, at a closer level with the aim of mitigating
systemic risk.
l) Regulating maintenance of margin of solvency
As per the Section 64 VA of the Insurance Act 1938
every insurer is required to maintain a required
Solvency Margin. The Authority has considered the
need for reviewing the solvency margin requirement
for pure term products, so as to help the insurers in
launching more pure term products for sufficiently
longer periods and at affordable rates. The Authority
has reviewed the solvency margin requirement for the
linked business and proposed some factors with
respect to linked business in working out the required
solvency margin. These factors came into effect from
December 31, 2008 onwards. Further, the life insurers
were asked to submit scrip-wise details of investments
available for arriving at the ‘available solvency margin’
along with actuarial valuation reports for the year
ended 31 st March 2009 onwards.
m) Adjudication of disputes between Insurers and
Intermediaries or Insurance Intermediaries
IRDA does not carry out any adjudication in case of
disputes between insurers and intermediaries or
insurance intermediaries. Insurers were advised to
approach the available quasi-judicial or judicial
channels like Insurance Ombudsmen. In case of any
disputes between insurers and intermediaries, the
Authority seeks clarifications from the concerned.
n) Supervising the functioning of the Tariff
Advisory Committee
With the removal of tariffs, the Tariff Advisory
Committee has been designated by the Authority as
the data repository for maintenance of database for
various classes of insurance. The TAC maintains a
web enabled declined lives database for exclusive use
of the life insurers. This database has incorporated
the suggestions of Life Council and enlarged its scope
of use. With the removal of tariffs, Tariff Advisory
Committee does not regulate rates of any non-life
insurance business.
o) Specifying the percentage of the premium
income of the insurer to finance schemes for
promoting and regulating professional
organizations referred to in clause (f)
The Authority has not prescribed any percentage of
the premium income of the insurer to finance schemes
for promoting and regulating professional
organizations referred to in clause (f).
p) Specifying the percentage of life insurance
business and general insurance business to be
undertaken by the Insurers in the rural and social
sector
The obligations as stipulated in the IRDA (Obligations
of insurers towards the rural or social sector)
Regulations, 2002 lay down the requirements to be
complied with by the insurers during the first five years
of their operations. In case of public sector insurers
these obligations have been linked to their
performance in the year 2001-02 in these sectors. With
the amendments which were notified in 2007-08, the
obligations of the private insurers’ upto the tenth year
of operations has been laid down. Simultaneously,
the obligations of the public sector insurers were also
revisited. The obligations of the private insurers are
as under:
Rural sector:
(i)
(ii)
in respect of a life insurer: commencing from
seven per cent of the total policies written direct
in the first financial year to twenty per cent in the
tenth financial year.
in respect of a non-life insurer: commencing from
two per cent of total gross premium income
written direct in the first financial year to seven
per cent from the ninth financial year onwards.
Social sector, in respect of all insurers
Commencing from five thousand lives in the first
financial year to fifty five thousand lives in the tenth
financial year.
61