The insurance reforms initiative by the government, which will attract more foreign capital into the sector, will also have stringent penalty provisions on companies found compromising on consumer interests. The Insurance Laws (Amendment) Ordinance 2014, which will give the necessary push to the companies in terms of fund raising, will also enhance the current penalty provisions. The Insurance Regulatory and Development Authority (Irda) will also be provided more teeth by the Ordinance.
According to sources, the penalty provisions will get substantially enhanced. "This is being done to ensure that all insurance companies comply with the law. The idea is to protect consumers from being duped by bogus marketing claims," said an official familiar with the development.
Meanwhile, Irda has issued guidelines making it mandatory to disclose benefits and the basic tenets of policies in the public domain. "Every insurer shall place in public domain details of each and every product being offered for sale by the insurer as approved by Irda," said the draft regulations. Additionally, all life insurance products will have to clearly mention whether they come with profit or without profit. It has also asked the agents to strictly adhere the advertising norms.
The Ordinance will also empower Irda to regulate key aspects of the company operations in areas like solvency, investments, expenses and commissions, that should be in line with best global practices.
The Insurance Laws (Amendment) Ordinance 2014 has been promulgated to amend the Insurance Act, 1938, the General Insurance Business (Nationalisation) Act, 1972 and the Insurance Regulatory and Development Authority Act, 1999, in accordance with the Insurance Laws (Amendment) Bill 2008.
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