annual report 2009-10 - IRDA

ANNUAL REPORT 2009-10discretion. The Authority has issued show causenotice to the IFFCO Tokio General InsuranceCompany Ltd, for violation of IRDA circular dated15 th September, 2006 regarding guidelines onplacement of insurance and reinsurance risks.14. Supervising the functioning of the TariffAdvisory Committee (TAC)III.14.1 With the removal of tariffs effective1 st January, 2007, the role of TAC has been diluted.The Insurance (Amendment) Bill 2009 vide Section64 ULA (2) has proposed to dissolve the TAC. Thedraft section proposed in the Amendment Bill isindicated as under:“Section 64 ULA (2): The Authority shall, inconsultation with the Central Government, prepare ascheme for the existing employees of the TariffAdvisory Committee on its dissolution, keeping in viewthe interests of such employees on such terms andconditions as it may, by Order determine.”III.14.2 In the light of the above, the TAC employeeswere offered Special Voluntary Retirement (SVR)under two schemes namely Special VoluntaryRetirement Scheme (SVRS) 2009 and 2010. Afterexercising the option, the current strength of TACstands at 85, comprising of 19 officers and 66 staffmembers.15. Specifying the percentage of the premiumincome of the insurer to finance schemes forpromoting and regulating professionalorganisations referred to in clause(6)III.15.1 The Authority has not prescribed anypercentage of the premium income of the insurer tofinance schemes for promoting and regulatingprofessional organisations referred to in clause (6).sector insurers these obligations have been linked totheir performance in the year 2001-02 in these sectors.With the amendments which were notified in2007-08, the obligations of the private insurers uptothe tenth year of operations have been laid down.Simultaneously, the obligations of the public sectorinsurers have also been revisited. The obligations ofthe private insurers are as under:III.16.2 Rural sector• In respect of a life insurer: commencing fromseven per cent of the total policies written directin the first financial year to twenty per cent in thetenth financial year.• In respect of a non-life insurer: commencing fromtwo per cent of total gross premium incomewritten direct in the first financial year to sevenper cent from the ninth financial year onwards.III.16.3 Social sector:In respect of all insurers commencing from fivethousand lives in the first financial year to fifty fivethousand lives in the tenth financial year.In respect of the existing insurers as on the date ofcommencement of IRDA Act, 1999 (four non-lifeinsurers and LIC), the Regulations provided that thequantum of insurance business to be done in the ruraland social sectors shall not be less than what wasrecorded by them for the accounting year ended31 st March, 2002. Based on the amendmentregulations notified by the Authority, the obligationsof these insurers towards the rural and social sectorsfor the financial year 2007-08 to the financial year2009-10 are as under:III.16.4 Life Insurance Corporation of India (LIC)16. Specifying the percentage of life insurancebusiness and general insurance business to beundertaken by the Insurers in the rural and socialsectorIII.16.1 The obligations as stipulated in the IRDA(Obligations of insurers towards the rural or socialsector) Regulations, 2002 lay down the requirementsto be complied with by the insurers during the firstfive years of their operations. In case of the public(a)(i)(ii)Rural Sector ObligationsFinancial year 2007-08: twenty four per cent.Financial years 2008-09 and 2009-10: twenty fiveper cent of the total policies written direct in thatyear.81