Monday, August 20, 2012

Is IRDA fulfilling the duties of a regulator?

Would IRDA have fought with as much vivacious eagerness to better the state of the insurance industry as it is doing with respect to the current ULIP-controversy? Is IRDA fulfilling the duties of a regulator? by Vareen Gadhoke Ray

In 2009, a dismal figure of three new brokers got the license. And this year? Zero till date. On another front, government owned general insurance companies, at the abovementioned low penetration levels, are still suffering huge underwriting losses in the non-life sector, especially in motor insurance claims (companies like New India Assurance – India’s largest general insurer – have underwriting losses that now are 117% of even the premium collected; all general insurers together had 137% losses!). The reason? IRDA has put an iron-hold cap on motor premiums, forcing an administered premium regime (this at a time when premiums in fire, marine, aviation etc have already been left to market forces).

While IRDA refuses to look into the matter ostensibly to support the insured civilian, IRDA refuses to take action on the other hand when insurers flatly refuse to reimburse, quoting myriad contractual issues. For example, in May 2008, a Supreme Court judgement clarified that not even one health claim should be rejected due to the “pre-existing disease” clause. In the same year, 90% of rejected health claims were done so under the “pre existing diseases” clause. Is IRDA worried in a similar manner as it is currently while it protects the interests of 14 ULIP ‘sellers’? Clearly not. Over 91 lakh pure insurance policies (not including ULIPs) aggregating over Rs.100,000 crores lapsed during the year 2009. Is IRDA conducting a research on why these phenomena are occurring and how to help disadvantaged consumers? Till date, IRDA does not have a grievance management system for redressal of complaints. It says it has a “web based system.” Who can access it? Only IRDA personnel. What it perhaps is more concerned with is keeping its finances intact. The Comptroller and Auditor General pulled it up in May 2010 for clandestinely keeping its finances in independent bank accounts out of the purview of the government.

J. Hari Narayan, Chairman, IRDA, told B&E last year, “The honeymoon period is over for the insurance sector.” One guesses the same goes for IRDA too, and it’s about time it starts acting like a professional body instead of basking in glory that was never rightfully earned.




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