CUSTOMER SERVICE REGULATORY VIEW

By PC James Executive Director, IRDA

ECONOMIC DEVELOPMENT & GROWTH OF NON LIFE INSURANCE PRODUCTS

Higher From protection of physical Mature Markets Spending assets to protection of income and financial assetsAccident, Health and Disability on insurance for individuals Insurance credit and financial Liability insurance for per head insurance for businesses individuals Liability insurance for businesses Motor Emerging Markets Marine and other insurance (comprehensive) Business interruption trade related ( consequential loss) insurance transport insurance Commercial property Underdeveloped Markets insurance property insurance for large govt projects Motor insurance (3rd party liability) Level of Economic Development (GDP per head)

CHALLENGING ENVIRONMENT
Regulatory Mission, Competition, International Benchmarks, Convergence of Institutions, Instruments, Intermediaries , Disintermediation and Reintermediation

Growing customer awareness, expectations

Insurance Industry

Changing Pricing scenario / De-tariffing

Rapid rate of technology advancements & innovation

New Business Models

Increasing Product-Price Complexity and Flexibility, ART, Derivatives

Mission of IRDA To protect the interests of the policyholders, to regulate, promote and ensure orderly growth of the insurance industry and for matters connected therewith or incidental thereto.

FUNDAMENTALS OF AN IDEAL REGULATORY ENVIRONMENT

PROTECTION OF THE CONSUMER PROMOTION OF THE INDUSTRY COMPETITIVE NEUTRALITY TRANSPARENCY COST EFFECTIVENESS ACCOUNTABILITY FLEXIBILITY

PROTECTION
ESTABLISH A REGULATORY FRAMEWORK TO PROVIDE ADEQUATE PROTECTION TO CONSUMERS

PREVENT /ENFORCE SUCH REGULATIONS INSTIL PUBLIC CONFIDENCE

PROMOTION
Provide a favourable climate for product development/intermediation and healthy growth of insurance A reliable and stable market Freedom of entrepreneurial spirit * Balance between degree of prudential regulation and degree of freedom
*

COMPETITIVE NEUTRALITY
*

Level playing field for all participants

* Minimal entry and exit barriers

* No undue restrictions on institutions or products

* Well defined rules of game

SOURCES OF REGULATIONS
*

Laws / Statutes

- Government
- Regulations - Guidelines - Industry - Corporate Governance

* Formal Regulations Non-formal Regulations Self-regulation Internal Regulation

LAW
MAKES GENERAL FRAMEWORK FOR THE INDUSTRY EG. INSURANCE ACT 1938 IRDA ACT 1999 REGULATOR Issues specific rules & regulations Responsibility for enforcement

JUDICIARY
*

Decide on suits

* Give interpretations * Decide on the legality of an insurance practice

INSURANCE POLICY FILE & USE - policy to confirm to requirements imposed by statute/regulation - policy to be consistent, not ambiguous, misleading, unfair or inequitable - the benefits provided are reasonable in relation to the premium charged

DESIRABLE REQUIREMENTS
Standardisation of clauses Simplification of terms & coverages Full disclosure Avoidance of misleading/confusing clauses Definitions of terms List of Policy Prohibitions including list of permissible exclusions

SELLING METHODS
LICENSING OF AGENTS / INTERMEDIARIES

AGENTS CORPORATE AGENTS BACASSURANCE BROKERS

SURVEYORS TPAS

ADVERTISING

POLICYHOLDER PROTECTION REGULATIONS POINT OF SALE PROSPECTUS PROVIDE ALL MATERIAL INFORM ATION TO DECIDE THE BEST COVER FOLLOW CODE OF CONDUCT PROPOSAL OF INSURANCE GRIEVANCE REDRESSAL PROCEEDURE MATTERS TO BE STATED IN POLICY CLAIMS PROCEEDURE POLICYHOLDER SERVICING DUTY OF INSURED

INSURANCE OMBUDSMAN
INSURANCE OMBUDSMAN EXISTS FOR SPEEDY, CONVENIENT REDRESSAL OF GRIEVANCES OF INSURED THAT TOO AT MINIMUM COSTS. OMBUDSMAN CAN DEAL WITH PERSONAL LINES CLAIMS (INCLUDING HEALTH INSURANCE) UP TO RS.20 LACS.

GRIEVANCE ISSUE PROCESSES

1. 2. 3. SETTLING INDIVIDUAL GRIEVANCES ANALYSIS OF GRIEVANCES CATEGORISING GRIEVANCES DELAY STRUCTURAL/SERVICE ISSUES POLICY/ CONTRACT ISSUES

REMOVING ROOT CAUSES

ANALYSING ROOT CAUSES STUDY OF RULINGS, JUDGEMENTS EMPOWERED LEVELS TO TAKE CORRECTIVE ACTION REVIEW RESULTS CHANGE OF PRACTICES, SYSTEMS, PRODUCTS

IRDA GRIEVANCE CELL

DEPARTMENT WISE NON LIFE COMPLAINTS RECEIVED(APR'05-MAR'06)

OMI 15%

OTHERS 4%

FIRE MARINE 6% 2%

MOTOR 25%

HEALTH 48%

IRDA GRIEVANCE CELL

SOURCEWISE COMPLAINTS RECEIVED (APR'04-MAR'05) Company 13%

Individuals 87%

IRDA GRIEVANCE CELL

NATUREWISE CATEGORISATION OF COMPLAINTS RECEIVED DURING APR'05-MAR'06

4% 27% 52% 17%

NON SETTLEMENT / DELAY IN SETTLEMENT OF CLAIM REPUDIATION / PARTIAL SETTLEMENT OF CLAIM POLICY ISSUES OTHER REASONS

IRDAS CONCERNS
PROHIBITED SALES PRACTICES AND UNETHICAL INTERMEDIATION MISLEADING ADVERTISEMENTS

FAILURE TO PROVIDE PROPER

DISCLOSURES INSENSITIVITY TO CONSUMER WELFARE DELAYS

THE WAY FORWARD

1. 2. 3. 4. 5. 6. 7. TIMELINESS. DECREASE PROCESS DELAYS NEED FOR CLARITY & QUALITY IN COMMUNICATION CREATE PROCEDURES FOR QUICK DECISION MAKING CONVEY WRITTEN DECISIONS & IF NEGATIVE WITH REASONS RECORD REASONS IN FILE INFORM AVAILABILITY OF EXTERNAL REMEDIES IF NOT RESOLVED INTERNALLY. USE PROCEDURES THAT INCREASE

CONSUMER ACCESS

THANK YOU