INSURANCE – INVESMENT OF FUNDS –

CONSTRAINTS AND SKILLS

► INVESMENT MANAGEMENT

► OBJECTIVES OF INVESMENT POLICY

► THE MAGNITUDE OF FUNDS

► THE NATURE OF INVESMENT

► FREEDOM OF DECISION

► POLICY CONSTRAINTS ON INVESTING IN STOCK MARKETS

► CONSTRAINTS OF THE STOCK MARKET

1. CHANGING SECURITIES EXCHANGE BOARD OF INDIA (S E B I)

REGULATIONS AT FREQUENT INTERVALS

2. IN ADEQUATE VOLUME OF TRADING

3. THERE IS NO SIGNIFICANT SECONDARY MARKET EASILY

AVAILABLE FOR DEBTS TO FACILITATE SWAPPING FROM
EQUITY TO DEBT

4. THE SEBI IS MAKING EFFORTS TO INTRODUCE PERFECT

CONDITIONS FOR THE MARKET LIKE IMPROVED
COMMUNICATION FACILITIES

► DEVELOPMENT OF EXPERTISE

► OVERALL MANAGEMENT

► RESPONSIBILITY NOT RESTRICTED TO THE FUNDS MANAGERS

► THE INVESMENT POLICY IN INDIA

1. THE FUNDS SHOULD BE INVESTED SO AS TO SAFEGUARD AND

PROMOTE TO THE MAXIMUM EXTEND POSSIBLE THE INTEREST
OF POLICY HOLDERS

2. THE INVESMENTS SHOULD BE DISPOSED OVER DIFFERENT

CLASSES OF INVESMENT , DIFFERENT INDUSTRIES AND
DIFFERENT REGIONS
3. THE INSURANCE COS. SHOULD TAKE INTEREST IN
UNDERWRITING DEBENTURES AND ISSUES AFTER CAREFUL
INVESTIGATION

4. THE INVESMENT POLICY SHOULD SERVE THE LARGE ECONOMIC

AND SOCIAL CONSIDERATIONS OF THE COUNTRY

5. THE INSURANCE COS. SHOULD ACT PURELY AS AN INVESTOR

AND NOT ASSUME THE ROLE OF AN OPERATOR OR SPECULATOR
AND NOT TRY TO TAKE ADVANTAGE OF TEMPORORY
FLUCTUATIONS IN THE MARKET PRICES

6. THE INSURANCE COS. SHOULD ACTIVELY EXAMINE ITS

INVESMENT PORTFOLIO FROM TIME TO TIME , AND TAKE SUCH
ACTIONS AS MAY BE NECESSARY

7. THE INSURANCECOS. SHOULD NOT ACQUIRE , CONTROL OR

PARTICIPATE IN THE MANAGEMENT OF ANY CONCERN , IN
WHICH IT HAS INTEREST AS AN INVESTOR , UNLESS
EXCEPTIONAL CIRCUMSTANCES WARRANT SUCH
PARTICIPATION

► REGULATION OF INVESMENT INEVITABLE

► INVESMENT DECISIONS MANDATED BY THE GOVERNMENT

► CONTRIBUTION TO THE SOCIAL AND INFRASTRUCTURE SECTORS

UNDER THE IRDA REGULATIONS INVESMENTS IN THE INFRASTURE

AND SOCIAL SECTOR CAN NOT BE LESS THAN 15%

► SOME ISSUES RELATING TO REGULATIONS

► GOVERNMENT RELUCTANT TO GIVE UP CONTROL

► ALTERNATIVE INVESMENT CHANNELS AVAILBLE

► IMPACT OF THE TAX POLICIES

► INVESTOR AND POLICYHOLDER PROTECTION

REGULATION OF THE INSURANCE BUSINESS
► THE NEED FOR REGULATION IN EVERY SECTOR

► REGULATION OF INSURANCE

► OBJECTIVES OF REGULATION

► RESPONSIBILITIES OF THE REGULATOR

► REGULATION IN INDIA

1. INDIAN LIFE ASSURANCE COS. ACT 1912

2. THE INSURANCE ACT 1938
THE ACT SOUGHT TO CREATE A STRONG AND POWERFUL
SUPERVISORY AND REGULATORY AUTHORITY IN THE
CONTROLER OF INSURANCE
3. LIFE INSURANCE ACT 1956
4. GENERAL INSURANCE BUSINESS(NATIONALISATION) ACT 1972
5. I R D A BILL 1999
6. OPPOSTION TO IRDA BILL

► FUNCTIONS AND DUTIES OF THE REGULATOR

1. ISSUE TO THE APPLICANT A CERTIFICATE OF REGISTRATION ,

RENEW , MODIFY , WITHDRAW , SUSPEND OR CANCEL SUCH
REGISTRATION

2. PROTECTION OF INTEREST OF THE POLICYHOLDERS IN

MATTERS CONCERNING ASSIGNING OF POLICY , NOMINATION
BY POLICYHOLDERS ,INSURABLE INTEREST , SETTLEMENT OF
INSURANCE CLAIMS, SURRENDER VALUE OF POLICY AND OTHER
TERMS AND CONDITIONS OF CONTRACTS OF INSURANCE

3. SPECIFYING REQUISITE QUALIFICATIONS , CODE OF CONDUCT

AND PRACTICAL TRAINING FOR INTERMEDIARY OR INSURANCE
INTERMEDIATERIES AND AGENTTS

4. SPECIFYING THE CODE OF CONDUCT FOR SURVEYORS AND LOSS

ASSESSORS

5. PROMOTING EFFICIENCY IN THE CONDUCT OF INSURANCE CO

6. PROMOTING AND REGULATING PROFESSIONAL ORGANISATIONS
CONNECTED WITH THE INSURANCE AND REINSURANCE
BUSINESS

7. LEVYING FEES AND OTHER CHARGES FOR CARRYING OUT THE

PURPOSES OF THE ACT

8. CALLING FOR INFORMATION FORM , UNDERTAKING INSPECTION

OF , CONDUCTING ENQURIES AND INVESTIGATIONS INCLUDING
AUDIT OF THE INSURERS , INTERMEDIARIES , INSURANCE COS.
CONNECTED TO INSURANCE BUSINESS

9. CONTROL AND REGULATION OF RATES , ADVANTAGES ,TERMS

AND CONDITIONS THAT MAY BE OFFERED BY INSURERS IN
RESPECT OF GENERAL INSURANCE BUSINESS NOT SO
CONTROLLED AND REGULATED BY TARIFF ADVISORY
COMMITTEE (T A C) UNDER SECTION 64 U OF THE INSURANCE
ACT 1938

10. SPECIFYING THE FORM AND MANNER IN WHICH BOOKS OF

ACCOUNTS SHALL BE MAINTAINED AND STATEMENT OF
ACCOUNTS SHALL BE RENDERED BY INSURERS AND OTHER
INSURANCE INTERMEDIARIES

11. REGULATING INVESMENTS OF FUNDS BY INSURANCE COS

12. REGULATING THE MAINTAINCE OF MARGIN OF SOLVENCEY

13. ADJUDICATION OF DISPUTES BETWEEN INSURERS AND

INTERMEDIARIES OR INSURANCE INTERMEDIARIES

14. SUPERVISING THE FUNCTIONING OF THE TARIFF ADVISORY

COMMITTEE

15. SPECIFYING THE PERCENTAGE OF PREMIUM INCOME OF THE

INSURERS TO FINANCE SCHEMES FOR PROMOTING AND
REGULATING PROFESSIONAL ORGANISATIONS

16. SPECIFYING THE PERCENTAGE OF LIFE INSURANCE BUSINESS

AND GENERAL INSURANCE BUSINESS TO BE UNDERTAKEN BY
THE INSURER IN THE RURAL AND SOCIAL SECTOR

17. EXERCISING SUCH OTHER POWERS AS MAY BE PRESCRIBED

UNDER IRDA ACT 1999 SECTION 14