Regulation and client advice
CHAPTER-13
The role of the Government
• The irda act 1999 gives the Central
Government of India the powers to supersede
the IRDA by issuing a notification.
• The Act gives power to the Central Government
to issue directions, in writing from time to time, to
the IRDA on questions of policy,other than those
relating to technical and administrative matters.
• Under prevelling laws the government allows
26% FDI in the insurance sector.
• The Government offers various tax incentives to
encourage people to invest in insurance .
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Relationship between the IRDA and Central
Government
Rules for carrying out the provisions of the Act
Grants
Directions on questions of policy
Annual statement of accounts
Returns, statements and particulars on
programmes
I
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Key Indian and international
insurance bodies
• Insurance Regulatory and Development Authority
(IRDA)
• Life Insurance Council (LI Council)
• General Insurance Council (GI Council)
• Insurance Brokers Association of India (IBAI)
• Institute of Actuaries of India (IAI)
• Tariff Advisory Committee (TAC)
• Insurance Institute of India (III)
• National Insurance Academy (NIA), Pune
• Chartered Insurance Institute (CII)
• Institute of Insurance and Risk Management (IIRM),
Hyderabad
• Life Insurance Council (LI Council)
develops and coordinates all
discussions between the government,
the IRDA and the public.it is the face
of the life insurance industry.
• The Insurance Brokers Association
of India (IBAI) is the IRDA recognised
apex body for all licensed insurance
brokers in india.
• The Institute of Actuaries of India
(IAI) aims to advance the actuarial
profession in india.
• The Tariff Advisory Committee (TAC) was
established to control and regulate the rates,
advantages, term and conditions that may be
offered by insurers in respect of general
insurance business.
• The Insurance Institute of India (III) was
established to promote insurance education and
training in india.
• The Chartered Insurance Institute (CII) works
with local regulators, educational partners and
industry organisations to improve the
professionalism, skills and behaviour of
insurance and financial service staff and agents
working in their local markets.
Duties, powers and functions of
the IRDA and other regulators
• IRDA was constituted as an autonomous
body to regulate & develop the insurance
industry.
• Section 14 of the IRDA Act 1999,lays down
the duties,powers & fuctions of the IRDA.
• The IRDA has the duty to regulate,promote &
ensure the orderly growth of insurance nad
reinsurance business.
IRDA (Licensing of Insurance
Agents) Regulations 2000
• Becoming an agent
• Application form (Regulation 3) & fee
(Regulation 7)
• Qualification (Regulation 4)
• Practical Training (Regulation 5)
• Examination (Regulation 6)
• Licensed Agent
WHO
CAN
BECOME
AN AGENT?
• Individuals
• Collectives like
companies , firms,
banks,
cooperative societies etc
CORPORATE INSURANCE
EXECUTIVE
In case of collectives a CORPORATE
INSURANCE EXECUTIVE/s is / are
appointed who will be required to obtain
licenses Others who work for the
corporate agent will be called Specified
Persons and they will be required to
obtain certificates.
Which means…..
• In case of collectives like companies,
firms, banks a person will be appointed
who will hold a license and the others who
work along with him will have to obtain
certificates.
WHAT
IS THE
PROCEDURE FOR
BECOMING
AN AGENT ?
LICENSE
• The licence allows the person to act as agent for
life insurer, for a general insurer or as a
composite insurance agent working for a life
insurer as well as a general insurer.
• No agent is allowed to work for more than one
life insurer or more than one general insurer
• The licence issued by IRDA will be valid for 3
years
• Fees is Rs 250/- for individuals as well as
corporate agents
•
The fees for the certification of the
specified person is Rs 500/-
Application
A person who wishes to obtain a licence to
act as an insurance agent must make an
application, in the required format, to a
designated person as specified in
Regulation 3. The application must be
accompanied by the fee of Rs. 250,
payable to the authority as specified in
Regulation 7.
Qualification
An applicant living in a
place that has a
population of 5,000 or
more as per the last
census:
An applicant living
anywhere else:
•MINIMUM 12TH PASS
•MINIMUM 10TH PASS
•AN EQUIVALENT
EXAMINATION PROVIDED
BY RECOGNISED BOARD.
•AN EQUIVALENT
EXAMINATION PROVIDED BY
RECOGNISED BOARD.
QUALIFICATIONS TO GET A LICENSE
(Contd)
• Have undergone training for at least 50 hours in
life or general insurance business.
• In case of composite insurance agent 75 hours
training is must.
• Must have passed the pre-recruitment
examination conducted by the Insurance
Institute of India or any other examination body
recognized by the IRDA.
DISQUALIFICATIONS
A person is debarred from holding a license or
an issued license is subject to cancellation if
• He is a minor
• Has been found to be of unsound mind by a
court of competent jurisdiction.
• Has been found guilty of criminal breach of
trust, misappropriation, cheating, forgery or
abetment or attempt to commit any such
offence.
DISQUALIFICATIONS (CONTD...)
• Found guilty of or knowingly participating in or
conniving at any fraud , dishonesty or
misrepresentation against an insurer or an insured.
• Not possessing the requisite qualifications and
specified training.
• Not passed examinations as specified by the
Regulations.
•
Found violating the code of conduct as
specified by the Regulations
Applications for renewal have to made at least 30 days
before the expiry of the license
RENEWAL OF LICENSE
Renewal Period
Amount( Rs.)
At least 30 days before 250
the expiry of license
Before the date of
350
expiry of license but
not made at least 30
days in advance
Normally be refused /
After the date of
1000
expiry of license
Prior to renewal of license the
Agent should have completed
• 25 hours practical training in life or
general insurance business.
• 50 hours practical training in life and
general insurance business in case of
composite insurance agent.
RENUMERATION OF AGENT
An agent works on commission basis. A stated
percentage of the premium collected through
his agency is paid as commission.
Section 40 A(1) if the Insurance Act states
that commission
• shall be 35% of the first year’s premium
• 71/2% of the second and third year’s renewal
premium
• 5% of subsequent renewal premium.
Exceptions
• During the first ten years of insurer’s business
, 40% may be paid instead of 35% of first
year’s premium.
• 6% commission can be paid on the renewal
premium even beyond the third year.
• Commission rates are less
• under term assurance plan
• for shorter duration policies
•
under single premium plans
•
under pension/annuity plans
AGENCY AS A PROFESSION
• An agent is expected to obtain life
insurance business and contribute to
the revenues of the insurer.
• He should report on relevant features
that affect the risk .
• Having met the prospect , he would be
aware of the nature and
characteristic of risk . He is
therefore, called the primary
underwriter.
Agent - Primary Underwriter
• He is expected to disclose all the relevant
facts that would affect the risk. Since he
is the person who has seen and
observed the prospect, he is aware of the
nature & the risk. Hence he is obliged to
report all the true facts about the
prospect.
AGENCY AS A PROFESSION
Agent has the dual responsibility of
being true to the interests of both the
parties .
• He is obliged to reveal all the important
terms and conditions of the policy to
the prospect even if they are restrictive
and
unpleasant. He is also obliged to
report to the insurer all the true
facts about the prospect .
THANK
YOU