Professional Documents
Culture Documents
Introduction to Chapter
Career of Insurance Agency is profoundly rewarding career, Not only in terms of money but in terms of prestige and satisfaction of having done good to others. Agents can earn gratitude of their customers, provided he keeps learning and has thorough knowledge of all that he needs to know. As a good professional, he must have brief background of the Laws governing insurance business in India.
Main Acts
Insurance Act, 1938. LIC Act, 1956. IRDA Act, 1999. Consumer Protection Act, 1986. Ombudsman.
Other Acts: Income Tax Act Wealth Tax Act Married Womens Property Act, 1874.
Section 42A: Provides for registration of Chief and Special Agents. Certificates to be issued after registration. Certificate valid for 12 months and can be renewed. Provisions stipulate number of insurance agents that a chief agent / Special agent may employ directly or through special agents, and also the minimum business they have to do.
Regulations framed by IRDA: Regulations called as Insurance Regulatory and Development Authority (Licencing of Insurance Agents) Regulations, 2000. Provisions of above are given at the end of the Book (Page number 198 to 207) and agents are expected to go through the same. Issue or renewal of licence, Qualifications of applicant, practical training, Examination, Fees, Code of Conduct, Cancellation of licence, Issue of Duplicate Licence etc. may be referred.
Direct Broker
Rs.25,000
Rs.75,000 Rs.1,25,000
0.50% of Rs.1 lac remuneration (Minimum = fee for first licence) ---- do ---Rs.3 lac
---- do ---Rs.5 lac
There should not be interest of Non-Indian in the capital 20% of Capital to be kept as Fixed Deposit with Scheduled Bank, but IRDA may ask for higher amount (Maximum Rs.100 lacs)
The Brokers functions: Getting information about client and risk management philosophy Advice to client on cover and terms Maintaining detailed information about available insurance markets Submission of quotations received from insurers Providing underwriting information Acting promptly on instructions from clients and providing progress report Assisting in settlement of claims Maintaining records of insurance business and claims
Code of Conduct for Brokers: Utmost good faith, care and diligence in dealing with clients Convey quotations, explain degree of choice available, explain reasons for recommendation, explain claim procedure, etc. Keeping information about client as confidential avoiding conflict of interest Becoming a member of the Insurance Brokers Association of India or such other body as may be approved by IRDA Not to employ agents or canvassers to bring business Not to criticise other insurers or members of the Association.
Brokers should obtain insurance policies covering professional indemnity, against any omission or commission or negligence, loss because of fraudulent or dishonest acts, loss of documents, on part of broker or his employees. Cover should be for the period pf licence Limit should be 3 times annual remuneration. (Minimum:- Direct Brokers:50 lacs, Reinsurance Brokers Rs.250 lacs and Composite Broker Rs.500 Lacs)
Once, licence is cancelled, he is not permitted to transact any fresh business, but may continue to service existing business. IRDA has right to look into complaints from clients of the Brokers.
COPA :- Continued
Consumer can approach various forums for redress, in case he is not satisfied with goods / services provided. Has to allege a defect in the goods or service Fault, imperfection, shortcoming or inadequacy in quality, nature or manner of performance, which is required to be maintained
COPA :- Continued.
Consumer dispute redressal forums are to be established in each district and each state. District Level :- complaints up to value of Rs.20lac State Level :- Complaints up to value of Rs1 cr. Also, provision for constitution of National Commission, for attending matters beyond jurisdiction of State Forum or appeals against State Forums decisions.
OMBUDSMAN
Section 114 (1) of Insurance Act empowers Central Govt. to frame rules known as Redressal of Public Grievances Rules, 1998, whereby Ombudsmen are appointed. Appointed by Governing body of the Insurance Council. Resolves complaints regarding disputes between Policyholders and Insurers
Ombudsman Continued .
Complaints may relate to
Partial or total repudiation of claims Dispute relating to payment of premium Dispute on legal construction of the policy relating to claims Delay in settlement of claims Non-issue of insurance document to customers
Ombudsman Continued .
Not a judicial authority Acts as counsel and mediator No right to summon witnesses Lawyers not permitted to argue case Parties are allowed to make personal submissions. Entertained only if a) Complaint rejected by insurer or b) reply not received within
Ombudsman Continued .
Complaint to be made within 1 year after rejection of representation by insurer The matter should not be before any court or consumer forum or arbitration. Ombudsman makes recommendations within 1 month, and insurer has to comply within 15 days and inform
Ombudsman Continued .
The complainant has to intimate his acceptance of the award within one month, and insurer has to comply within 15 days and inform Ombudsman. If complainant does not intimate acceptance, award can not be implemented.
Other Acts
Income Tax Act Married Womens Property Act, 1874. Wealth Tax Act
Wealth Tax Act: The Wealth Tax Act exempts life insurance policies totally provided premiums are payable for a period of 10 years or more. If the policy term is less than 10 years, proportionate value will be exempted.
But
No investment is Most Perfect having all these attributes. A sacrifice has to be made for sake of one or the other attribute Hence look for those investments which offer the best solutions to his personal needs, under his own set of circumstances.
Shares
Most PopularBut person should lave adequate savings before investing in Shares. Motive is Capital Appreciation Earnings not Guaranteed Dividends may not be declared, although Company has made profits. As Dividends are declared on Face Value, the Yield may be insignificant, if purchased from market at higher price.
Shares Continued .
No tax advantages Chances of losses are as GREAT as chances of making profits Uncertainty is the key to bear in mind. Share prices fluctuate and sensitive to many factors ranging from Changes in US economy to State level politics. Liquidity exists, but has to be sold at prevailing market conditions, hence capital appreciation can not be guaranteed