annual report 2009-10 - IRDA

ANNUAL REPORT 2009-10III.11.4 Also, IRDA issued guidelines on the scopefor Internal and Concurrent Audit for investmentoperations of insurance companies to monitorinvestments of both Traditional and Unit Linkedportfolio, at a closer level with the aim ofmitigating systemic risk. Further IRDA videINV/CIR/023/2009-10 dated 4 th August, 2009 issuedguidelines for Audit of Investment Risk ManagementSystems & Process and Internal / Concurrent Audit.12. Regulating maintenance of margin of solvencyIII. 12.1 As per Section 64 VA of the InsuranceAct, 1938 every insurer is required to maintain arequired Solvency Margin. The Authority hasconsidered the need for reviewing the solvency marginrequirement for pure term products, so as to help theinsurers in launching more pure term products forsufficiently longer periods and at affordable rates. TheAuthority has reviewed the solvency marginrequirement for the linked business and proposedsome factors with respect to linked business in workingout the required solvency margin. These factors cameinto effect from December 31, 2008 onwards. Further,the life insurers were asked to submit scrip-wise detailsof investments available for arriving at the ‘availablesolvency margin’ along with actuarial valuation reportsfor the year ended 31 st March 2009 onwards. Therehave been no further amendments in the regulationsin 2009-10.13. Adjudication of disputes between Insurers andIntermediaries or Insurance IntermediariesIII.13.1 As per Regulation 41(2) of IRDA (InsuranceBrokers) Regulations, 2002, any disputes arisingbetween an insurance broker and an insurer or anyother person either in the course of his engagementas an insurance broker or otherwise may be referredto the Authority by the person so affected; and onreceipt of the complaint or representation, the Authoritymay examine the complaint and if found necessaryproceed to conduct an enquiry or an inspection or aninvestigation in terms of these regulations.III.13.2 The Authority in exercise of its power underRegulation 41(2) adjudicated the following disputesbetween the Insurers and Insurance Brokers:PRMAN Reinsurance Brokers Pvt. Ltd vs TheOriental Insurance Co LtdA complaint was received from The Oriental InsuranceCo. Ltd. in respect of a claim involving a huge recoveryfrom Reinsurers M/s Contego Underwriting (formerlyknown as Mayflower Engineering Consortium)-London and M/s TSM Agencies Ltd. London. TheAuthority granted both parties an opportunity of beingheard on 5 th March, 2010. The matter is presentlyunder examination.Megatop Insurance Broking Ltd vs AgricultureInsurance Company of India Ltd.A complaint was received against Megatop InsuranceBroking Ltd., (MIBL) from Chairman-cum-ManagingDirector, Agriculture Insurance Company of India Ltd.,(AICIL), alleging gross irregularities of varying natureby MIBL with regard to Weather Based Crop InsuranceScheme. The Authority suspended the Licence ofMIBL and initiated enquiry proceedings against it. Theenquiry is presently in progress.Key Insurance Brokers Pvt. Ltd vs The OrientalInsurance Co Ltd.A complaint was received against Key InsuranceBrokers Pvt. Ltd. from The Oriental Insurance Co. Ltd.(OICL), alleging connivance of the broker in thefraudulent claim of about `4 lakh reported under theStandard Fire and Special Perils Policy of M/s VaibhavPackaging placed by the broker with OICL BranchOffice, Ghaziabad. The Authority after considering theinvestigation report and the explanation furnished bythe broker, has issued a show cause notice to thebroker.Strategic Insurance Broking Services Pvt Ltd vsIFFCO Tokio General Insurance Co Ltd.M/s Strategic Insurance Broking Services Pvt. Ltd.,filed a complaint against IFFCO Tokio GeneralInsurance Company Ltd., with regard to payments ofbrokerage commission in respect of extension ofErection All Risks Insurance and EAR Advanced Lossof Profits Insurance Policy issued in 2009 to LancoAmarkantak Power Private Limited. Since the disputewas between the insurer and the broker, the Authorityadvised the broking company to approach appropriatelegal forum for resolution of the dispute at their80