annual report 2009-10 - IRDA

ANNUAL REPORT 2009-107. Levying fees and other charges for carrying outthe purposes of the ActIII.7.1 The Authority in terms of powers vested bySection 3 of the Insurance Act levies both registrationand renewal fees from the insurers and variousintermediaries associated with the insurance business.However, registration fee of `50,000 is charged at thetime of granting of registration certificate and notthereafter. The renewal of registration fees forinsurance companies stands at 1/10 th of 1 per cent ofthe gross direct business written in India or `50,000,whichever is higher subject to a maximum of `5 Crore.In case of the reinsurer, the fee is chargeable basedon the facultative business written by the reinsurer inIndia. This follows amendment of regulation 20 of IRDA(Registration of Indian Insurance Companies)Regulations, 2000, issued in February 2003 afterobtaining the approval of Insurance AdvisoryCommittee. There has been no revision in thesecharges post the amendments in February 2003.8. Calling for information from, undertakinginspection of, conducting enquiries andinvestigations including audit of the insurers,intermediaries, insurance intermediaries and otherorganisations connected with the insurancebusinessIII.8.1 The financial year 2009-10 was the tenth yearof operations of insurance companies, post openingup of the sector. While the Authority has beencontemplating commencement of comprehensive onsiteinspection, it was considered that the registeredinsurers should be allowed time to stabilise operationsprior to taking on full scale inspection. However, duringthe first half of the year 2010-11, on-site inspectiontargeted on critical issues in respect of four life insurersand four non life insurers was undertaken.9. Control and regulation of rates, advantages,terms and conditions that may be offered by theinsurers in respect of general insurance businessnot so controlled and regulated by the TariffAdvisory Committee under Section 64U of theInsurance Act 1938 (4 of 1938)III.9.1 With detariffing of non-life industry w.e.f1 st January, 2007, for all classes of tariff businessexcept motor third party cover, the ball was set rollingfor freedom to the insurance companies in pricing ofthe products. For motor third party cover, which is astatutory insurance cover required under theprovisions of Motor Vehicles Act, the Authority hasretained the powers to determine the rates, terms andconditions. To ensure that the third party (also called‘Liability Only Cover’) is made available notably forcommercial vehicles, the Authority has constituted theIndian Motor Third Party Insurance Pool forcommercial vehicles. The setting up of the Motor Poolhas ensured involvement of all insurers in theunderwriting and management of motor third party risk.The pool is managed by the General InsuranceCorporation for a prescribed fee.III.9.2 Thus, except for Motor Third Party risks, in caseof other new insurances and renewals effective on orafter 1 st January, 2007, respective insurers are freeto quote rates of premium in accordance with the rateschedules and rating guidelines filed with the Authority.Risks qualifying as large risks under paragraph 19 (v)of the circular no. 021/IRDA/F&U/ Sep-06 dated28 th September, 2006 are to be insured at the rates,terms and conditions and basis of insurance exactlyas the rates, terms etc., as developed from thereinsurers with no variation.III.9.3 Further, w.e.f., 1 st January, 2009, the Authorityhas permitted relaxations in the terms and conditionsof coverage of the erstwhile tariff classes of businessin fire, engineering, Industrial All Risk (IAR) and Motor(Own Damage). In view of the relaxation, the Authorityhas been receiving proposals for innovative covers inthe form of ‘Add-On’ covers in the above said classesof business. However, the insurers are not permittedto abridge the scope of standard covers that wereavailable under the erstwhile tariffs beyond the optionsstipulated in the erstwhile tariffs.10. Specifying the form and manner in whichbooks of accounts shall be maintained andstatements of accounts shall be rendered byInsurers and other Insurance Intermediaries.III.10.1 The Authority has mandated a number ofmeasures to improve transparency and disclosures.These stipulations include those which pertain toadditional disclosures in the financial statements andthose in the public domain. The disclosures in thepublic domain include those on the respectivewebsites of insurance companies, and in thenewspapers on periodic basis. Additional disclosures78