LAW COMMISSION TAKES UP REVIEW OF INSURANCE LAWS

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The Law Commission of India has taken up a comprehensive review of Insurance Laws with a view to overhauling the outdated Insurance Laws and compressing them into a complete new legislation that will give more teeth to the Insurance Regulatory Development Authority (IRDA) and protect the interest of consumers especially the insurance policy holders. In this connection, a Consultation Paper is being prepared in the Commission.

Anyone including professionals, corporate sector and service providers interested in offering their views may send them by mail to the Member Secretary, Law Commission of India, 730 ‘A’ wing, Shastri Bhavan, New Delhi-110001 or e-mail at vnathan@nic.in .

There are four Insurance Laws, presently, governing insurance sector in India. These are , the Insurance Act, 1938, the Life Insurance Corporation Act, 1956, the General Insurance Business (Nationalisation) Act, 1972 and the Insurance Regulatory Development Authority Act, 1999.

The objective of the exercise is to ensure that there is a comprehensive regulatory mechanism with adequate enforcement power to make insurance hassle-free for consumers in addition to effective functioning of the insurance sector now that it has opened up to private sector including foreign players.

It is intended to provide the IRDA more powers to regulate the insurance companies which have been regulated hitherto by these four Acts.

The proposed review will address the problem of the regulator in dealing with new players in case of their failure in adhering to the norms of the regulator on solvency ratio .

The proposed measure will also provide a mechanism to protect the interests of insured in the event of a company going bankrupt.

In addition, the proposed simplified amalgamated Insurance Law will incorporate some of the best global practices in the insurance sector so that the Indian Insurance Industry is able to meet the challenges of globalization in the form of quality of services, competition and safeguarding the interest of consumers by ensuring fair-play to them in terms of customer care and satisfaction of guaranteed insurance services.