I R D A (Insurance Regulatory and Development Authority) an introduction

Introduction

The government appointed A committee in April 1993 under the chairmanship of Shri R N Malhotra ex governor of The Reserve Bank of India this committee on reforms of the Insurance sector submitted its report on 7th January 1994 to the then Union finance minister recommending many changes including its privatisation.

The most important recommendation are listed below
First Recommendation of the entry of private entities into the Insurance sector to introduce healthy competition between the new private insurance and the existing monopolistic .

Second Recommendation of gradual withdrawal of government capital in the existing public sector monopolistic entities.

Circumstances affecting the Risk in Life Insurance

Circumstances affecting the Risk in Life Insurance Risk in life insurance is the risk of death at an early date due to disease or distinguished from accident In. Thomson vs. Weems 1884 9 AC 671,681 Lord Blackburn observed “Those whose business is to insure lives calculate on the average rate of mortality and charge a premium which on that average will prevent their being loses. a. Age of the proponent. b. His family history. c. Personal health d. Moral history including habits of life past and present. e. Geographical position & occupation Age of the Proponent Age is an important material fact in life insurance as the rate of premium depends on theage of the assured. Case law:-Alliance and strutgarter Vs. Hemantha Kumar AIR 1938 Cal 641 Once it is written Then it is admitted In case of M.K. Shah V. Yorkshire Insurance Co. AIR 1938 Bom 161 Once the age is admitted by the insurer then correctness of the age cannot be questioned unless the insurer can prove that his admission was procured by the fraud of the assured. {Section 45 of the Insurance Act 1938 says After 2 years company have no right to reopen the things.} The section generally provides that the correctness of a representation shall not be questioned by an insurer after two years but the proviso specifically makes an exception with reference to the representation of the age in a proposal form. • According to this the insurer is entitled to call for proof of the age from the assured at any time if the same had not been proved and admitted as true by an endorsement on the policy notwithstanding the fact that the requisition of the proof has been made by insurer after two years. • When once a date is given as date of birth and on subsequesnt verification after the issue of the policy the date is found to be wrong it may result in either Overstatement of Age :---------- Overage Understatement of Age:---------Underage In either case the original representation becomes a misrepresentation, but effect on the validity of the policy is different.  If it is overstatement:- it is considered to be an innocent misrepresentation as it will be against the interest of the maker and so in such cases the validity of the policy is not affected. In such cases if the insurer accepts the proof of age, he can be compelled to refund the excess payment towards the premium and to adjust the rate for future payment according to the proved age.  But when it turns out to be an understatement of age, if is proved gross understatement or is proved to have been made willfully, it amounts to fraud and the policy become voidable. 1. The sum assured may be reduced to such amount 2. The assured may be required if he wants to continue the policy for the entire insured amount to pay the difference of premium with interest. Hemmin’s v/s Scetore (1905) ch 365 Misstated age as 41 years through in fact she was at that time forty-four years, of age. This fact was brought to notice of the insurers in 1997 and inspite of that the insurers accepted the premiums for two subsequent year later they demanded form the assignee a highter rate of premium ande also the difference of premiums accumulate to date at the revised rate premium and the insurers refused to receive the same. If after becoming acquainted with a breach of warranty the office continue to treat the policy as valid it will be held to have waived the breach. Family History The risk in life policies the assured and heredity throws sufficient light and play an important role in the determination or the probable longevity of a person. In Asia Assurance Company V/s Kartiya Devi 1936 Cal 437 The total numbers of bothers and sisters had to be filled in one column and the actual number alive in another column. The assured filled the first column but left the other b lank. It was helf that answer amounted to suppression of truth and hence amounted to misrepresentation and the policy was void. Personal Health and Moral History The habits of life, past and present and which tend to shorten the life must be disclosed ,e.g. the use of opium, tobacco or alcohol. • The present state of health is important. • The past illness also become important • Regulat habits regarding food, sleep etc. tend to increase the longevity. Geographical Position The place where the applicant lives is important as climate and environment have an appreciable effect on one’s health. Unhealthy surrounding have a tendency to shorten the life. Further, the particular, place may be subject to earthquake, volcanoes and floods. Huguenin v/s Rayley Where the assured gave his residential address but actually he was not there at that time. It was held that the omission of this fact was fatal to the policy and the insurance company was not liable. Occupation If it is a dangerous occupation like a soldier, sailor, airman or workman in an ammunition factory the insurers charge a higher rate of premium.

The Important guidelines contained in IRDA (Protection of Policyholders Interests) Regulations, 2002

The Important guidelines contained in IRDA (Protection of Policyholders Interests) Regulations, 2002 are as under:

9. Claim procedure in respect of a general insurance policy (1) An insured or the claimant shall give notice to the insurer of any loss arising under contract of insurance at the earliest or within such extended time as may be allowed by the insurer. On receipt of such a communication, a general insurer shall respond immediately and give clear indication to the insured on the procedures that he should follow. In cases where a surveyor has to be appointed for assessing a loss/ claim, it shall be so done within 72 hours of the receipt of intimation from the insured.

(2) Where the insured is unable to furnish all the particulars required by the surveyor or where the surveyor does not receive the full cooperation of the insured, the insurer or the surveyor as the case may be, shall inform in writing the insured about the delay that may result in the assessment of the claim. The surveyor shall be subjected to the code of conduct laid down by the Authority while assessing the loss, and shall communicate his findings to the insurer within 30 days of his appointment with a copy of the report being furnished to the insured, if he so desires. Where, in special circumstances of the case, either due to its special and complicated nature, the surveyor shall under intimation to the insured, seek an extension from the insurer for submission of his report. In no case shall a surveyor take more than six months from the date of his appointment to furnish his report.

 (3) If an insurer, on the receipt of a survey report, finds that it is incomplete in any respect, he shall require the surveyor under intimation to the insured, to furnish an additional report on certain specific issues as may be required by the insurer. Such a request may be made by the insurer within 15 days of the receipt of the original survey report. Provided that the facility of calling for an additional report by the insurer shall not be resorted to more than once in the case of a claim.

 (4) The surveyor on receipt of this communication shall furnish an additional report within three weeks of the date of receipt of communication from the insurer.

 (5) On receipt of the survey report or the additional survey report, as the case may be, an insurer shall within a period of 30 days offer a settlement of the claim to the insured. If the insurer, for any reasons to be recorded in writing and communicated to the insured, decides to reject a claim under the policy, it shall do so within a period of 30 days from the receipt of the survey report or the additional survey report, as the case may be.

(6) Upon acceptance of an offer of settlement as stated in subregulation (5) by the insured, the payment of the amount due shall be made within 7 days from the date of acceptance of the offer by the insured. In the cases of delay in the payment, the insurer shall be liable to pay interest at a rate which is 2% above the bank rate prevalent at the beginning of the financial year in which the claim is reviewed by it.