Download PDF - IRDA

ANNUAL REPORT 2011-12
condition. Other conditions applicable to the credit
insurance policy are that - an insurer shall appoint a
credit management agency for assessing credit
worthiness of the policyholder and that the agency
shall have no confl ict of interest with the policyholder;
No specifi c trade credit insurance policy can be sold
to a single prospect; Trade credit insurance shall not
offer indemnity which is more than 80 per cent of the
trade receivable of the buyer or ninety per cent of the
cost incurred by the seller for the previous year,
whichever is lower; and that the insurer will have well
defi ned internal underwriting, risk management and
claims settlement guidelines duly approved by the
Board of Directors for writing this class of business.
II.1.10 In addition, the guidelines also prescribe the
framework for the creation of premium, claims, IBNR
and IBNER reserves on actuarial basis. The net
retention of the insurer for trade credit shall not exceed
two per cent of its net worth. The guidelines require
that the insurer shall have qualifi ed, experienced and
trained employees dealing with trade credit insurance.
To monitor the performance of the insurers in this line
of business, reporting requirements have been
prescribed by the Authority.
II.1.11 In terms of the new framework, insurers have
to fi le revised products in line with both File & Use
guidelines and the trade credit guidelines.
Relaxation in the Terms & Conditions of erstwhile
tariff coverage effective from 1 st January, 2009
II.1.12 After de-tariffi cation of the General Insurance
Industry, another major decision taken by the Authority
was to allow relaxations in erstwhile tariff products. In
a series of steps taken to promote innovations in
products and to increase insurance penetration, the
Authority vide its Circular dated 6 th November, 2010
has allowed insurers to fi le
Variations in deductibles set out in tariffs,
New add-on covers over and above the erstwhile
tariff covers,
Extension of engineering insurance coverage to
movable/portable equipments, and
Removal of minimum Total Sum Insured (TSI)
limit of `100 crore for Industrial All Risk (IAR)
policies and has also allowed IAR cover for
petrochemical industry.
II.1.13 However, the scope of standard covers available
under the existing tariffs cannot be abridged beyond
the options permitted in different categories and any
such new cover proposed is required to be subject to
fi ling with the IRDA under the F&U guidelines. The
relaxation of norms have been beneficial for the
customers while at the same time allowing the
companies to broaden their offerings; facilitate offer of
tailor-made products to different customers; and design
risk/industry specifi c cover.
Submission of compliance report for facultative
reinsurance placements
II.1.14 The Authority on review of the reinsurance
programme of the companies for the year 2008-09
advised all non-life insurance companies to place
“unplaced reinsurance” abroad only after offering it to
other Indian insurers and reinsurer. In order to monitor
compliance, the Authority has sought half-yearly report
on compliance with the stipulations by seeking details
of facultative placements made by the respective
company.
II.2 INTERMEDIARIES ASSOCIATED WITH THE
INSURANCE BUSINESS
Insurance Agents
II.2.1 The year 2011-12 witnessed 10.63 per cent
decrease in the number of individual agents. The
number has gone down from 26.39 lakh as on
31 st March, 2011 to 23.59 lakh as on 31 st March, 2012.
While the private life insurers recorded a decrease of
17.02 per cent, LIC showed a decrease of 4.40 per
cent. LIC has a much higher number of individual
agents than all private life insurers put together. At the
end of the year, while the number of agents with LIC
stood at 12.78 lakh, the corresponding number for
Insurer
TABLE II.1
DETAILS OF INDIVIDUAL AGENTS OF
LIFE INSURERS
As on
1 st April,
2011
Additions
during
2011-12
Deletions
during
2011-12
As on 31 st
March,
2012
Private 1302328 368211 589888 1080651
LIC 1337064 345917 404747 1278234
Industry 2639392 714128 994635 2358885
77