Do you know your insurance regulator?

The insurance industry has expanded tremendously in the last few years. This is especially reflected in the rapid growth in business, new products and competition, mostly after private insurers were allowed in 2000-01.

This has created a need for a strong and able regulator for the insurance industry, both to ensure its stable development, regulation of insurance companies and intermediaries and to safeguard policyholders' interests. This role has been entrusted to the Insurance Regulatory and Development Authority (IRDA).

IRDA has a multitude of functions. This includes registration and regulation of insurance and reinsurance companies, both life and general.

It also levies and collects requisite fees from insurance companies for conducting this role.  It sets guidelines for their capital adequacy and ensures that they maintain their solvency margins. That is, they should have enough funds to be able to pay their policyholders at all times.

It lays down guidelines as to how they should maintain their books of accounts and undertakes periodic inspections to ensure that they are in compliance of its guidelines. It also regulates and monitors premiums being charged.

The regulator also lays down guidelines for qualification and appointment of actuaries by insurance companies.  It also supervises the Tariff Advisory Committee (TAC).

This is a committee, which has been formed to decide and fix rates of premium on certain general insurance businesses, like fire, property, project insurance etc.

IRDA supervises the functioning of the TAC. It also gives license to and regulates insurance intermediaries like brokers, individual as well as corporate agents, surveyors and third party administrators (TPAs).

Investor/Policyholder Protection

Grievance redressal cell: IRDA has formed a grievance redressal cell for handling policyholder complaints. There are separate cells for life and general insurance. Policyholders have the option of submitting their grievances online or by mail to the concerned cells.

However, the cell has no powers to pass orders, but merely acts as a facilitative medium for speedy redressal of policyholder complaints against insurers for delayed or no response to their problems or repudiation of claims or disputes, by taking up the matter with the concerned company.

Insurance ombudsman: In case the matter is not resolved through the grievance redressal cell, policyholders have the option of approaching the insurance ombudsman.

The ombudsman is a special arbitrator who is appointed under government mandate by the life and general insurance councils. The role of the ombudsman is to ensure speedy settlement of policyholder grievances and disputes at a low cost. Any insurance related complaint of a value up to Rs 20 lakh, both for life as well as general insurance, can be referred to the ombudsman. There are 12 offices of the insurance ombudsman across the country.

• A complainant has to file the case with the ombudsman who has jurisdiction over the area where the complainant has bought the policy.
• The complaint can be filed only after the policyholder has taken up the matter directly with the insurance company concerned and has not received any reply for over a month or the complaint or claim has been repudiated or disputed by the insurance company.
• The policy holder should file the complaint with proof of this communication as well as all relevant papers within a year of the dispute or repudiation.
• Another point to note is that the policyholder should not have approached any legal authority like a consumer forum or court, prior to approaching the ombudsman, since the ombudsman will then have no authority to proceed with the matter.

The ombudsman takes up the complaint with the insurance company and tries to reach at an amicable settlement between all the parties. 

It can also pass awards. But it is not binding on the complainant. However, insurance companies have an understanding to generally accept the award of the ombudsman, since the ombudsman has been appointed by the Insurance Council, of which they are members.

The IRDA, thus, has the tough role to balance the needs of the industry and marry them with your needs. 

The writer is director, Touchstone Wealth Planners.