Law Of Insurance PDF

LAW OF INSURANCE MISSION VISION CORE VALUES CHRIST is a nurturing ground for an individual’s Excellence and Service Faith in God | Moral Uprightness holistic development to make effective contribution to...

LAW OF INSURANCE MISSION VISION CORE VALUES CHRIST is a nurturing ground for an individual’s Excellence and Service Faith in God | Moral Uprightness holistic development to make effective contribution to Love of Fellow Beings the society in a dynamic environment Social Responsibility | Pursuit of Excellence  CHRIST Deemed to be University Regulatory Authorities Excellence and Service  CHRIST Deemed to be University Insurance Regulatory and Development Authority of India (IRDAI) Insurance Regulatory and Development Authority of India (IRDAI), is a statutory body formed under an Act of Parliament, i.e., Insurance Regulatory and Development Authority Act, 1999 (IRDA Act, 1999) for overall supervision and development of the Insurance sector in India. The powers and functions of the Authority are laid down in the IRDA Act, 1999 and Insurance Act, 1938. The Insurance Act, 1938 is the principal Act governing the Insurance sector in India. It provides the powers to IRDAI to frame regulations which lay down the regulatory framework for supervision of the entities operating in the Insurance sector. Section 14 of the IRDA Act,1999 specifies the Duties, Powers and Functions of the Authority Excellence and Service  CHRIST Deemed to be University Certify insurance companies Protect interest of the policy holders Adjudication of disputes Issue to the applicant a certificate of registration, renew, modify, withdraw, suspend or cancel such registration; protection of the interests of the policy holders in matters concerning assigning of policy, nomination by policy holders, insurable interest, settlement of insurance claim, surrender value of policy and other terms and conditions of contracts of insurance; specifying requisite qualifications, code of conduct and practical training for intermediary or insurance intermediaries and agents specifying the code of conduct for surveyors and loss assessors; Promoting efficiency in the conduct of insurance business; Promoting and regulating professional organisations connected with the insurance and re-insurance business; Excellence and Service  CHRIST Deemed to be University Levying fees and other charges for carrying out the purposes of this Act; Calling for information from, undertaking inspection of, conducting enquiries and investigations including audit of the insurers, intermediaries, insurance intermediaries and other organisations connected with the insurance business; Control and regulation of the rates, advantages, terms and conditions that may be offered by insurers in respect of general insurance business not so controlled and regulated by the Tariff Advisory Committee under section 64U of the Insurance Act, 1938 (4 of 1938); Specifying the form and manner in which books of account shall be maintained and statement of accounts shall be rendered by insurers and other insurance intermediaries; Regulating investment of funds by insurance companies; Excellence and Service  CHRIST Deemed to be University Adjudication of disputes between insurers and intermediaries or insurance intermediaries; Supervising the functioning of the Tariff Advisory Committee; Specifying the percentage of premium income of the insurer to finance schemes for promoting and regulating professional organisations Specifying the percentage of life insurance business and general insurance business to be undertaken by the insurer in the rural or social sector; and Exercising such other powers as may be prescribed Excellence and Service  CHRIST Deemed to be University MISSION STATEMENT OF THE AUTHORITY To protect the interest of and secure fair treatment to policyholders. To bring about speedy and orderly growth of the insurance industry (including annuity and superannuation payments), for the benefit of the common man, and to provide long term funds for accelerating growth of the economy; To set, promote, monitor and enforce high standards of integrity, financial soundness, fair dealing and competence of those it regulates; To ensure speedy settlement of genuine claims, to prevent insurance frauds and other malpractices and put in place effective grievance redressal machinery; To promote fairness, transparency and orderly conduct in financial markets dealing with insurance and build a reliable management information system to enforce high standards of financial soundness amongst market players; To take action where such standards are inadequate or ineffectively enforced; To bring about optimum amount of self-regulation in day-to-day working of the industry consistent with the requirements of prudential regulation. Excellence and Service  CHRIST Deemed to be University Chairman and Members of Authority As per the section 4 of IRDAI Act 1999, Insurance Regulatory and Development Authority of India (IRDAI, which was constituted by an act of parliament) specify the composition of Authority The Authority is a ten member team consisting of (a) a Chairman; (b) five whole-time members; (c) four part-time members, (all appointed by the Government of India) Excellence and Service  CHRIST Deemed to be University Accounts and Audit functions Section 17 of IRDA Act, 1999 The Authority shall maintain proper accounts and other relevant records and prepare an annual statement of accounts in such formas may be prescribed by the Central Government in consultation with the Comptroller and Auditor-General of India. The accounts of the Authority shall be audited by the Comptroller and Auditor-General of India at such intervals as may be specified by him and any expenditure incurred in connection with such audit shall be payable by the Authority to the Comptroller and Auditor-General. Excellence and Service  CHRIST Deemed to be University The Comptroller and Auditor-General of India and any other person appointed by him in connection with the audit of the accounts of the Authority shall have the same rights, privileges and authority in connection with such audit as the Comptroller and Auditor-General generally has in connection with the audit of the Government accounts and, in particular, shall have the right to demand the production of books of account, connected vouchers and other documents and papers and to inspect any of the offices of the Authority. The accounts of the Authority as certified by the Comptroller and Auditor-General of India or any other person appointed by him in this behalf together with the audit report thereon shall be forwarded annually to the Central Government and that Government shall cause the same to be laid before each House of Parliament. Excellence and Service  CHRIST Deemed to be University Tariff Advisory Committee Sec. 64U of the Insurance Act, 1938 providing for the establishment of Tariff Advisory Committee with effect from the commencement of the Insurance (Amendment) Act, 1968 was to control and regulate the rates, advantages, terms and conditions that may be offered by insurers in respect of general insurance business. The Advisory Committee is a body corporate having perpetual succession and a common seal, with power, subject to the provisions of that Act, to acquire, hold and dispose of property, both movable and immovable, and to contract and may, by the said name, sue and be sued. The main task of Tariff Advisory Committee is to regulate and control the rates, benefits, terms and conditions offered by life & general insurance companies in India. Excellence and Service  CHRIST Deemed to be University Sec. 64UA of the Insurance Act, 1938 provides for the composition of the Advisory Committee. Under that section, the Advisory Committee shall consist of the following members, namely,-- (a) a Controller of Insurance, ex officio, who shall be the Chairman; (b) a senior officer of the office of the Controller nominated by the Controller nominated by the Controller, who shall be the Vice-Chairman; (c) not more than ten representatives of Indian insurers, elected (in their individual capacities) by such insurers in such manner, from such areas and from among such insurer or groups of insurers as may be prescribed; (d) not more than four representatives of insurers incorporated or domiciled elsewhere than in India but registered in India, elected (in their individual capacities) by such insurers in such manner, and from among such insurers or groups of insurers as may be prescribed. The Secretary to the Advisory Committee shall be an officer of the office of the Controller, nominated by the Controller. Excellence and Service  CHRIST Deemed to be University Powers and Functions The Tariff Advisory Committee enjoys the following powers – Conduct Elections Procedure for holding meetings Elections for Regional Committee Procedure for convening meetings Appoint officers of Regional Committee Power to fix rates, advantages, T&C Decisions regarding prospective loss Ensuring no discrimination Bound the insurer Excellence and Service  CHRIST Deemed to be University OMBUDSMAN Office of Insurance Ombudsman, which has been constituted under the Insurance Ombudsman Rules, 2017, is an alternate Grievance Redressal platform which has been setup with an aim to resolve grievances of aggrieved policyholders against Insurance Companies and its Intermediaries or Insurance Brokers in a speedy and cost-effective manner. The Offices of Insurance Ombudsman are under the administrative control of Council for Insurance Ombudsmen (CIO). Any aggrieved policyholder who has been issued a policy, may either himself or through his legal heirs or nominee or assignee may register a complaint with the Office of Insurance Ombudsman either online or through written communication through e-mail or letter. Excellence and Service  CHRIST Deemed to be University 17 Ombudsman Centres, covering the country, established in Ahmedabad, Bengaluru, Bhopal, Bhubaneswar, Chandigarh, Chennai, Delhi, Guwahati, Hyderabad, Jaipur, Kochi, Kolkata, Lucknow, Mumbai, Pune, Patna and Noida. Procedure is quick and free of cost. Apart from regular hearings at the Centres, Insurance Ombudsmen hold outstation hearings within their territorial jurisdiction for the convenience of complainants. Online hearings are also conducted by the Insurance Ombudsman for the convenience of the complainants. Online registration of complaints is introduced from April 2021 whereby the complainant can register his complaint from home. With a current complaint disposal rate of 87.34% the institution has given a good account of itself as an alternate Grievance Redressal Machinery in Insurance Sector. Excellence and Service  CHRIST Deemed to be University After receipt of all requirements, Insurance Ombudsman shall dispose of the complaint by way of an award within a period of three months and such decision shall be binding on the Insurance Companies and it’s Intermediaries or Insurance Brokers as the case may be. Insurance Ombudsmen are appointed by the Council for Insurance Ombudsmen and are empowered to receive and consider complaints alleging deficiency in performance required of an insurer (including its agents and intermediaries) or an insurance broker on any of the following: Excellence and Service  CHRIST Deemed to be University (a) delay in settlement of claims, beyond the time specified in the regulations, framed under the Insurance Regulatory and Development Authority of India Act, 1999; (b) any partial or total repudiation of claims by the life insurer, general insurer or the health insurer; (c) disputes over premium paid or payable in terms of insurance policy; (d) misrepresentation of policy terms and conditions at any time in the policy document or policy contract; (e) legal construction of insurance policies in so far as the dispute relates to claim; (f) policy servicing related grievances against insurers and their agents and intermediaries; Excellence and Service  CHRIST Deemed to be University (g) issuance of life insurance policy, general insurance policy including health insurance policy which is not in conformity with the proposal form submitted by the proposer; (h) non-issuance of insurance policy after receipt of premium in life insurance and general insurance including health insurance; and (i) any other matter arising from non-observance of or non-adherence to the provisions of any regulations made by the Authority with regard to protection of policyholders' interests or otherwise. Excellence and Service  CHRIST Deemed to be University The settlement process: The Ombudsman will act as mediator and Arrive at a fair recommendation based on the facts of the dispute If you accept this as a full and final settlement, the Ombudsman will inform the company which should comply with the terms in 15 days If a settlement by recommendation does not work, the Ombudsman will Pass an award within 3 months of receiving all the requirements from the complainant and which will be binding on the insurance company. Once the Award is passed - The Insurer shall comply with the award within 30 days of the receipt of award and intimate the compliance of the same to the Ombudsman. Excellence and Service  CHRIST Deemed to be University Qualification of Insurance Ombudsman A person appointed for insurance ombudsman should not be less than 55 year of age but not exceed 65 year of age at time of application. He should be a member of civil service or all India service of the union and should held a post of joint secretary or equivalent to the Government of India; or He should served at least 25 years in the insurance industry and has held post not less than one level below that of a director of board. An insurance ombudsman will hold the office for a term of three years or till he attains the age of 70 years, whichever is earlier. But he is not eligible for reappointment Excellence and Service  CHRIST Deemed to be University The insurance ombudsman shall be appointed by the council of insurance ombudsman on the recommendations of the selection committee. Currently there are 17 Ombudsman functioning in all over India. An ombudsman may be removed from office on the ground of gross misconduct during his term of office by the council for insurance ombudsman. The word gross misconduct includes (physical incapacity, or unsoundness of mind, or insolvency, or conviction for an offence involving moral turpitude, or engagement in any other paid employment, or conflict of interest, or furnishing false information for selection process or omits to specify material facts). Excellence and Service  CHRIST Deemed to be University Case No: 21-002-0217 - (Bhubaneswar) Facts: Insurer alleging suppression of material fact concerning health and pre-existing illness by the life assured. Findings of the case: Insurer could not prove beyond doubt that life assured suffered from serious illnesses before taking the policy. Decision: Insurer was directed to settle the claim within one month from the receipt of the consent letter. Excellence and Service  CHRIST Deemed to be University Case No: 21-001-0314 - (Ahmedabad) Facts: While taking the policy life assured had informed in great detail the state of his health and habits due to which several special reports were called for and the proposal was accepted with extra premium. Findings of the case: The life assured died within ten months from the date of proposal. The claim was repudiated on the grounds of suppression of material facts on the basis of certificate of treatment, prescription, letters of doctor and hospital. It was observed that all the diagnosis/treatment commenced after 7 days from the date of acceptance of risk. All the documents proved that the deceased was not aware of his ailment at the time of taking the proposal. Decision: The insurer was directed to pay the full amount. Excellence and Service  CHRIST Deemed to be University Powers of the Insurance Ombudsman Conciliation Award making The ombudsman is empowered to receive and lodge complaints as per the personal lines of the insurance from any person who has any grievance against any insurance company. The complaint may relate to any grievance against the insurance company in the form of: Any partial or total repudiation of claims by an insurer Any dispute in respect to the premium paid or payable in terms of the policy Any dispute on the legal construction of the policies in sor far as such disputes relate to claims Delay in claim settlement Non-issue of any insurance document to the clients even after receipt of premium Excellence and Service  CHRIST Deemed to be University Insurance agent An insurance agent is the representative of the insurance company, i.e. the insurer. According to section 42 of the Insurance Act, 1938, an insurance agent is a licensed person who receives or agrees to receive payment commission or remuneration in consideration for soliciting or procuring business and includes business related to the continuance, renewal or revival of policies of insurance. In other words, an insurance agent in India is a person who agrees to work for the insurer in exchange for remuneration or commission. Such an agent promotes the products and services offered by the insurer. An insurance agent is a representative of a particular insurance company selling its insurance policies and related products. Apart from selling the products of the company, an agent also helps in improving the brand image of the company. Insurance Regulatory and Development Authority (licensing of Individual Insurance Agents)Excellence Regulations, 2000 and Service  CHRIST Deemed to be University Appointment of insurance agents. Section 42. (1) An insurer may appoint any person to act as insurance agent for the purpose of soliciting and procuring insurance business: Provided that such person does not suffer from any of the disqualifications mentioned in sub-section (3). (2) No person shall act as an insurance agent for more than one life insurer, one general insurer, one health insurer - Provided that the Authority shall, while framing regulations, ensure that no conflict of interest is allowed to arise for any agent in representing two or more insurers for whom he may be an agent. Excellence and Service  CHRIST Deemed to be University (3) The disqualifications referred to in the proviso to sub-section (1) shall be the following: -- (a) that the person is a minor; (b) that he is found to be of unsound mind by a court of competent jurisdiction; (c) that he has been found guilty of criminal misappropriation or criminal breach of trust or cheating or forgery or an abetment of or attempt to commit any such offence by a court of competent jurisdiction: Provided that where at least five years have elapsed since the completion of the sentence imposed on any person in respect of any such offence, the Authority shall ordinarily declare in respect of such person that his conviction shall cease to operate as a disqualification under this clause; Excellence and Service  CHRIST Deemed to be University (d) that in the course of any judicial proceeding relating to any policy of insurance or the winding up of an insurer or in the course of an investigation of the affairs of an insurer it has been found that he has been guilty of or has knowingly participated in or connived at any fraud, dishonesty or misrepresentation against an insurer or insured; (e) that in the case of an individual, who does not possess the requisite qualifications or practical training or passed the examination, as may be specified by the regulations; (f) that in the case of a company or firm making, a director or a partner or one or more of its officers or other employees so designated by it and in the case of any other person the chief executive, by whatever name called, or one or more of his employees designated by him, do not possess the requisite qualifications or practical training and have not passed such an examination as required under clauses (e) and (g); (g) that he has not passed such examination as may be specified by the regulations; (h) that he has violated the code of conduct as may be specified by the regulations. Excellence and Service  CHRIST Deemed to be University 4) Any person who acts as an insurance agent in contravention of the provision of this Act, shall be liable to a penalty which may extend to ten thousand rupees and any insurer or any person acting on behalf of an insurer, who appoints any person as an insurance agent not permitted to act as such or transacts any insurance business in India through any such person shall be liable to penalty which may extend to one crore rupees. (5) The insurer shall be responsible for all the acts and omissions of its agents including violation of code of conduct specified under clause (h) of sub-section (3) and liable to a penalty which may extend to one crore rupees. Excellence and Service  CHRIST Deemed to be University GUIDELINES ON APPOINTMENT OF INSURANCE AGENTS, 2015 1) An applicant seeking appointment as an Insurance Agent of an Insurer shall submit an application in Form I-A to the Designated Official of the Insurer 2) The Designated Official of the insurer, on receipt of the application, shall satisfy himself that the applicant:- a) has furnished the Agency Application in Form I-A complete in all respects; b) has submitted the PAN details along with the Agency Application Form; c) has passed the insurance examination as specified under Clause VI; (The Insurance Regulatory And Development Authority (Licensing Of Corporate Agents) Regulations, 2002) d) does not suffer from any of the disqualifications mentioned in Clause VII e) has the requisite knowledge to solicit and procure insurance business; and capable of providing the necessary service to the policyholders; Excellence and Service  CHRIST Deemed to be University 3) The Designated Official shall exercise due diligence in verifying the agency application and ascertaining that the applicant does not hold agency appointment for more than one life insurer, one general insurer, one health insurer and one of each of the mono-line insurers and is not in the centralised list of blacklisted agents. 4) The Designated Official shall also verify a) The centralised list of agents maintained by the Authority with the PAN Number of the applicant to ascertain the information b) The centralised list of black listed agents maintained by the Authority to ascertain that the applicant is not black listed. Excellence and Service  CHRIST Deemed to be University 5) The Designated Official on satisfying himself that the applicant has complied with all the conditions and also does not suffer from any of the disqualifications mentioned in sub-section (3) of Section 42 of the Act, may process the agency application and if found fit and proper, grant appointment to the applicant as an insurance agent by issuing an appointment letter within 15 days of receipt of all documents from the applicant. (6) The applicant so appointed as an insurance agent shall be provided an identity card, by the insurer which shall identify the agent with the insurer of which he/she is acting as an agent. The Designated Official shall enter and update the Agency Data of the applicant appointed as an Insurance agent in the Agency Portal maintained by the Authority through online mode immediately after the appointment of the agent. (7) The Designated Official may refuse to grant Agency Appointment to any applicant if the applicant does not fulfil any of the conditions mentioned in these Guidelines. The Designated Official shall communicate the reasons for refusal for appointment as agent to the application writing in, within 21 days of receipt of the application. (8) An applicant who is aggrieved by the decision of the Designated Official refusing to grant the agency appointment may submit a review application to the appellate officer of the insurer for review of the decision. The insurer shall designate an Appellate Officer to consider the review application of the applicant. The Appellate Officer shall consider the application and communicate the final decision in writing within 15 days of receipt of the review application. Excellence and Service  CHRIST Deemed to be University Insurance agents are primarily responsible for generating new business for insurance firms. They meet with clients, identify their needs, and offer different insurance options and coverages. They educate prospective clients about the importance of different insurance plans and foster lasting relationships with existing customers. Identifies prospective clients through leads and referrals Schedules client meetings Performs follow-up calls as needed Advises on insurance coverage Conducts periodic policy reviews Prepares insurance proposals Completes requirements and submits to underwriters/underwrites himself Stay updated on the different types of insurance products, such as life, property, and car insurance Excellence and Service  CHRIST Deemed to be University Duty/Responsibilities Soliciting and procuring new business Conserve the existing business: Assistance in selection of the best suitable policy Enquire into the client’s details: Assuring the date of birth and other related medical information Ensure that the policyholder averts instances of default: Preventing the policy from lapsing Remind the insured about the importance of the nominee Preparation of the required documentation Excellence and Service  CHRIST Deemed to be University An insurance agent must properly inform the prospective buyer of the insurance policy about all its terms and conditions in great detail so as to avoid misrepresentation, and both the policyholder and agent are on the same page. It is also the duty of the agent to suggest the best possible policy to the client on the basis of their needs and requirements. An insurance agent is supposed to introduce himself as an insurance agent and show the identity card when demanded by the client. The insurance agent is supposed to tell the client about the applicable rate of commission that agent will gain for selling the policy. The agent is supposed to explain the details of the insurance application form to the client. The agent is to make the client aware of the instances where the insurance agency can refuse the insurance application. The insurance bond is bound to comply with the rules and regulations for insurance agents laid down by the Insurance Regulatory and Development Authority of India. Excellence and Service  CHRIST Deemed to be University Every insurance agent shall identify himself and the insurer of whom he is an insurance agent; show the agency identity card to the prospect, and also disclose the agency appointment letter to the prospect on demand; disseminate the requisite information in respect of insurance products offered for sale by his insurer and take into account the needs of the prospect while recommending a specific insurance plan; where the Insurance agent represents more than one insurer offering same line of products, he should dispassionately advice the policyholder on the products of all Insurers whom he is representing and the product best suited to the specific needs of the prospect. disclose the scales of commission in respect of the insurance product offered for sale, if asked by the prospect; indicate the premium to be charged by the insurer for the insurance product offered for sale; Excellence and Service  CHRIST Deemed to be University obtain the requisite documents at the time of filing the proposal form with the insurer; and other documents subsequently asked for by the insurer for completion of the proposal; advise every prospect to effect nomination under the policy inform promptly the prospect about the acceptance or rejection of the proposal by the insurer; render necessary assistance and advice to every policyholder on all policy servicing matters including assignment of policy, change of address or exercise of options under the policy or any other policy service, wherever necessary; render necessary assistance to the policyholders or claimants or beneficiaries in complying with the requirements for settlement of claims by the insurer; Excellence and Service  CHRIST Deemed to be University Agent's Responsibilities to Company Company's Responsibility to Agent Agent's Responsibility to Insured/Applicant Excellence and Service  CHRIST Deemed to be University Insurance Intermediaries Insurance intermediaries serve as a bridge between consumers (seeking to buy insurance policies) and insurance companies (seeking to sell those policies). Insurance Intermediary also includes Surveyors and Third Party Administrators but these intermediaries are not involved in procurement of business. An intermediary has a distinct role to play in the entire life cycle of a product, from the point of sale through policy servicing, up to claim servicing. An intermediary shall provide all material information with respect to a proposed cover to enable the prospect to decide on the best one. The intermediary is expected to advise the prospect with complete disclosures and transparency. After the sale is effected, the intermediary must coordinate effectively between the customer and the insurer for policy servicing as well as claim servicing. Excellence and Service  CHRIST Deemed to be University Insurance Broker “Insurance Broker" means a person who is a direct broker, a reinsurance broker or a composite broker for the time being registered by the Authority, as the case may be, unless expressly stated to the contrary. Insurance brokers are licensed by the IRDA and governed by the Insurance Regulatory and Development Authority (Insurance Brokers) Regulations, 2002 There are 3 categories of insurance broker which are – Direct Broker Reinsurance Broker and Composite Broker. Excellence and Service  CHRIST Deemed to be University Direct brokers are licensed by the IRDAI (Insurance Regulatory and Development Authority of India) and familiarise themselves with the insurance business of the various clients so as to explain and arrange the same with an insurer. A direct broker provides advisory services with regard to the most appropriate policy and its related terms and conditions. A reinsurance broker arranges reinsurance contracts between direct insurers and reinsurers. Since he/she works on behalf of both parties, he is contractually obligated to both. Composite brokers are a combination of direct brokers and reinsurance brokers and therefore have a double role. - solicits and arranges insurance and/or re-insurance for its clients with insurers and/or reinsurers located in India and/or abroad; Excellence and Service  CHRIST Deemed to be University Eligibility Criteria The Government has prescribed minimum requirements for securing an Insurance broker license as mentioned below. Apart from this, the broker has to ensure to get registered with the IRDAI where in applicant is required to register in the portal and username and password would be generated by the system and sent to the user in the registered email id. Subsequently, an application can be submitted online by accessing the website www.irda.org.in. The application for new broker’s registration shall be accepted only through on-line mode. Excellence and Service  CHRIST Deemed to be University Application for Grant of Certificate of Registration The applicant should make an application regarding the type of insurance broker business. The application for an Insurance Broker License must be made in FORM B- Schedule I of the IRDAI(Insurance Brokers) regulations. The application must be submitted with documents mentioned in FORM-C Schedule I of the IRDAI(Insurance Brokers) regulations. For granting the certificate of registration, an application must be submitted along with the fees specified in FORM D- Schedule I of the IRDAI(Insurance Brokers) Regulations. The fees that has to be paid for application for an insurance broker is as follows: ○ Direct broker Rs.25,000. ○ Re-insurance broker Rs.50,000. ○ Composite broker Rs.75,000. Excellence and Service  CHRIST Deemed to be University Apart from this, there are mandatory fees that has to be paid for the registration requirements: ○ Direct Broker- Rs. 50,000/- after granting of an in-principal approval where the application is new. In case of renewal of registration, the fees will be Rs 1,00,000/- for a period of 3 years. ○ Re-insurance Broker- Rs. 1, 50,000/- after granting of an in-principal approval where the application is new. If there is a renewal of registration, then the fee to be paid for renewal is Rs. 3,00,000/- for 3 years. ○ Composite Broker- Rs.2, 50,000/- after granting of an in-principal approval where the application is new. If there is a renewal of registration, then the fee to be paid for renewal is Rs. 5,00,000/- for 3 years. The fee payable as the mandatory fee would be for the validity period of the certificate of registration. Fees must be paid through electronic means or demand draft (DD) payable in favor of the Insurance Regulatory and Development Authority of India, Hyderabad. Excellence and Service  CHRIST Deemed to be University The applicant can be asked to furnish further information by the authority If required, the applicant has to submit these documents within 30 days from receiving the intimation from the authority. If the authority feels that all the requisite information complies with the Insurance broker license, then an in-principal approval would be provided to the applicant for complying with the requirements related to the certificate of registration. The authority will grant the certificate if the applicant has complied with the laws and regulations. The certificate of registration as an Insurance Broker License would be given to the applicant when the applicant satisfies that the code of conduct would be adhered to. The broker applying for a certificate of registration can also apply for any other registrations under the IRDAI. Such other registration would only be granted to the applicant after issuing the certificate of registration Excellence and Service  CHRIST Deemed to be University An application for starting an insurance business can be rejected if the authority feels that the applicant has not fulfilled the necessary requirements. The authority must communicate the refusal to grant the application for an Insurance broker license within 30 days of communication of the rejection. An applicant can make a new application after one year of rejection of the application. Excellence and Service  CHRIST Deemed to be University Conditions for Granting the Insurance Broker License The insurance broker must conduct the business according to the rules of the IRDAI. If the insurance broker business has provided false or misleading information regarding the particulars of the business, then the same must be intimated to the authority. Insurance broker business must handle all grievance procedures of clients within 14 days of receiving the complaint. The business must keep information regarding the number of complaints received from customers. Insurance brokers must reasonably conduct their business under the rules laid down by the IRDAI. The insurance broker must maintain books of accounts. A certificate granted by the IRDAI would be valid for three years from the date of issue. This would be subject to the order from the authority. An insurance broker would not be permitted to do the Insurance Broker business without possessing a proper certificate and registered with the Excellence and Service authority  CHRIST Deemed to be University Functions of Direct broker / Reinsurance broker / Composite Broker Obtaining detailed information of the client's business and risk management philosophy; Familiarizing himself with the client's business and underwriting information so that this can be explained to an insurer and others; Rendering advice on appropriate insurance cover and terms; Maintaining detailed knowledge of available insurance markets, as may be applicable; Assisting in the negotiation of the claims; Maintaining proper records of claims; Assisting in opening of e-insurance accounts; Assisting in issuing e-insurance policies; and Any other function which the Authority may specify. Familiarizing himself with the client’s business and risk retention philosophy Excellence and Service  CHRIST Deemed to be University Complaint procedure the Insurance Ombudsman Before you submit your Grievance to Insurance Ombudsman please ensure that: You should have made a complaint to Insurance Company/Insurance Broker Insurance Company/Insurance Broker should have failed to furnish reply to you after the expiry of one month of your complaint; OR You are not satisfied with the response given by Insurance Company/Insurance Broker The complaint is being made to the Insurance Ombudsman within one year from: (a) Date of rejection of the complaint by the Insurance Company/Insurance Broker (b) Expiry of one month of filing the complaint if the Insurer/Broker fails to reply The amount of Compensation sought Excellence and in Insurance Ombudsman should Service  CHRIST Deemed to be University Any person who has a grievance against an insurance company (or insurance broker, as the case may be) may himself or through his legal heirs, nominee or assignee, make a complaint in writing to the Insurance Ombudsman within the defined territorial jurisdiction The complaint may be lodged with the office of Insurance Ombudsman under whose territorial jurisdiction (a) the Branch or Office of the insurance company or the insurance broker falls; OR (b) the residential address or place of residence of the complainant falls. What kinds of complaints can be lodged with Insurance Ombudsman? Excellence and Service  CHRIST Deemed to be University The complaint can be made by the insured himself or by his legal heirs, nominee or assignee either through a written complaint duly signed by him or through electronic mail or online through the online platform developed by the Council of Insurance Ombudsmen through the website www.cioins.co.in. For address of Office of Insurance Ombudsman, kindly refer to "Offices of Ombudsman" under "About Us" section on the webpage. Complaint can be registered online by clicking on the "Register complaint" under the Section "Complaint Online" on the webpage. The following documents are required a) Copy of representation submitted to Insurance Company/ Insurance Broker b) KYC particulars: Aadhar card, Pan Card, Driving License, etc c) Photograph (in case of online registration of complaints) d) Letter from Insurance Company/ Insurance Broker rejecting the representation / repudiating the claim. e) Copy of Insurance Policy Excellence and Service f) Any other document(s).  CHRIST Deemed to be University Complaint can lodged with the Office of the Insurance Ombudsman within one year from a) date of rejection of the complaint by the Insurance Company/Insurance Broker OR (b) expiry of one month of filing the complaint if the Insurer fails to reply However no complaint can be entertainable on the same subject matter on which proceedings are pending before or disposed of by any court or consumer forum or arbitrator. The Insurance Ombudsman can entertain complaints where the quantum of loss payable under the insurance policy does not exceed rupees 50 Lakhs. Excellence and Service  CHRIST Deemed to be University Wherever considered necessary, the Insurance Ombudsman will conduct hearing of both the parties either in person or through video conferencing. The Ombudsman may, on his own or on the request of the complainant, hear a matter through video-conference if he is satisfied that circumstances so require, after notifying the complainant and the insurer or insurance broker concerned. In case both parties agree for mediation, the Insurance Ombudsman shall give his Recommendation within 1 month of date of receipt of mutual written consent for such mediation, otherwise, he shall pass his Award within 3 months of the receipt of all requirements from the complainant. The award of Insurance Ombudsman shall be binding on the insurers (or insurance broker, as the case may be). However, if the complainant is not satisfied with the decision of the Insurance Ombudsman, he/she may exercise the right to take recourse to the normal process of law against the Insurance Company/Insurance Broker. Excellence and Service  CHRIST Deemed to be University Penalties for non-compliance with Insurance regulations in India Fines and Penalties: Insurance companies, insurance intermediaries, and other entities involved in the insurance industry can be subject to fines and penalties for violating regulatory requirements. These fines can vary in amount and are imposed based on the specific violation and its impact. Suspension or Cancellation of License: The IRDAI has the authority to suspend or cancel the license of an insurance company or insurance intermediary found to be in serious violation of insurance regulations. This can result in the entity being prohibited from conducting insurance business in India. Compensation to Policyholders: In cases where non-compliance with regulations leads to harm or financial loss to policyholders, the insurance company may be required to compensate affected policyholders as per the terms of their policies and regulatory directives. Excellence and Service  CHRIST Deemed to be University Additional Scrutiny: Non-compliant entities may be subjected to enhanced regulatory scrutiny, including increased reporting requirements, audits, and inspections. Public Censure: The regulatory authority may publicly censure or name non-compliant entities, which can harm their reputation and credibility in the market. Legal Action: In cases of severe non-compliance or fraudulent activities, legal action can be initiated against individuals and entities, potentially leading to criminal charges and prosecution. Market Impact: Non-compliance can negatively affect an insurance company's market standing, leading to a loss of business and investor confidence. Excellence and Service  CHRIST Deemed to be University Impact on Policyholders: Non-compliance can harm policyholders by leading to claim disputes, delays in claim settlement, or a lack of coverage when needed. Loss of Regulatory Approvals: Entities that do not comply with regulatory requirements may lose approvals for new product launches, mergers, acquisitions, or other business activities that require regulatory clearance. Excellence and Service  CHRIST Deemed to be University Provisions of the Insurance Act, 1938 Section 42D: Misconduct and Non-compliance: Insurance intermediaries, including agents, brokers, and other entities, are required to adhere to the code of conduct laid out by the Insurance Regulatory and Development Authority of India (IRDAI). Violations, such as misrepresentation, fraud, or failure to disclose material facts, fall under misconduct. Cancellation or Suspension of License: If an intermediary is found guilty of misconduct, IRDAI has the power to suspend or cancel their license. Section 42E: Penalties for False Representation: If an intermediary issues false documents or representations related to insurance contracts, they can face monetary fines or imprisonment. Excellence and Service  CHRIST Deemed to be University Section 102: Penalty for Non-compliance with Directions: A monetary penalty of up to ₹1 crore may be imposed for failing to comply with IRDAI’s directives. Section 42: Requirement of Licensing: If an intermediary operates without a valid license, this is deemed a violation, punishable by fines or suspension of business operations. Section 105B: Fraudulent Conduct: Any person (including intermediaries) involved in fraudulent conduct related to an insurance contract can be penalized with imprisonment (up to 10 years) and/or fines, including restitution to affected policyholders. Excellence and Service  CHRIST Deemed to be University Section 106: General Penalty: In cases where no specific penalty is prescribed, a fine extending to ₹1 crore can be imposed for violating the provisions of the Insurance Act. The Insurance Act, 1938, ensures strict penalties for insurance intermediaries found guilty of misconduct. The combination of license suspension, monetary penalties, and potential imprisonment serves as a deterrent against unethical practices. In any case of proven misconduct, the IRDAI plays a critical role in investigating and imposing appropriate penalties to uphold the integrity of the insurance sector. Excellence and Service  CHRIST Deemed to be University Example Case: Misconduct by Intermediary An insurance broker deliberately sells policies using misleading information, resulting in financial harm to policyholders. Violation of Duties: Misrepresentation of policy terms violates Section 42D. Operating without proper transparency breaches IRDAI’s code of conduct. Consequences for the Intermediary: License cancellation under Section 42D. Monetary penalty under Section 102 for violating IRDAI directions. Additional penalties under Section 105B for fraudulent conduct. Imposition of Penalties: If fraud is proven, imprisonment up to 10 years may be imposed. Financial penalties (e.g., up to ₹1 crore) can be levied. Remedial Action for Affected Policyholders: Restitution or compensation for policyholders may Excellence and be ordered under relevant sections of the Service law.