CONSULTATION PAPER ON REVISION
OF THE INSURANCE ACT AND THE
INSURANCE REGULATORY AND DEVELOPMENT ACT
The Law Commission
has released a Consultation Paper on the Revision of the Insurance
Act, 1938. The previous exercise to amend the Insurance Act, 1938
was undertaken in 1999 at the time of enactment of the Insurance
Regulatory Development Authority Act, 1999 (IRDA Act).
The Commission has
undertaken the present exercise in the context of the changed
policy that has permitted private insurance companies both in
the life and non-life sectors. A need has been felt to strengthen
the regulatory mechanism even while restructuring the existing
legislation with a view to removing portions that have become
redundant as a consequence of the recent changes.
Among the major areas
of changes suggested in the Consultation Paper are :
- merging of the provisions of the
IRDA Act with the Insurance Act to avoid multiplicity of legislations
;
- deletion of redundant and transitory
provisions in the Insurance Act, 1938;
- Amendments reflect the changed
policy of permitting private insurance companies and strengthening
the regulatory mechanism ;
- Providing for stringent norms
regarding maintenance of ‘solvency margin’ and investments by
both public sector and private sector insurance companies ;
- Providing for a full-fledged grievance
redressal mechanism that includes
- The Constitution of Grievance
Redressal Authorities (GRAs) comprising one judicial and two
technical members to deal with complaints/claims of policyholders
against insurers (the GRAs are expected to replace the present
system of insurer appointed Ombudsman)
- Appointment of adjudicating officers
by the IRDA to determine and levy penalties on defaulting insurers,
insurance intermediaries and insurance agents.
- Providing for an appeal against
the decisions of the IRDA, GRAs and adjudicating officers to
an Insurance Appellate Tribunal (IAT) comprising a judge (sitting
or retired) of the Supreme Court/Chief Justice of a High Court
as presiding officer and two other members having sufficient
experience in insurance matters.
- Providing for a statutory appeal
to the Supreme Court against the decisions of the IAT.
The Law Commission
proposes to have further intensive consultation with a wide range
of interested parties including consumer groups, insurers and
insurance agents. The full text of the Consultation Paper is available
at the website of the Law Commission at http://lawcommissionofindia.nic.in
and responses from interested persons can be sent directly to
the Law Commission either by post or e-mail at vnathan@nic.in
on or before July 10,2003.
