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CUSTOMER SERVICE - REGULATORY VIEW By PC James Executive Director, IRDA.

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Presentation on theme: "CUSTOMER SERVICE - REGULATORY VIEW By PC James Executive Director, IRDA."— Presentation transcript:

1 CUSTOMER SERVICE - REGULATORY VIEW By PC James Executive Director, IRDA

2 Underdeveloped Markets Emerging Markets Mature Markets Motor insurance (3rd party liability) property insurance for large gov’t projects Marine and other trade related transport insurance Commercial property insurance Motor insurance (comprehensive) Liability insurance for businesses Liability insurance for individuals credit and financial insurance for businesses Accident, Health and Disability insurance for individuals Level of Economic Development (GDP per head) Higher Spending on Insurance per head ECONOMIC DEVELOPMENT & GROWTH OF NON LIFE INSURANCE PRODUCTS Business interruption ( consequential loss) insurance From protection of physical assets to protection of income and financial assets

3 Growing customer awareness, expectations Growing customer awareness, expectations Increasing Product-Price Complexity and Flexibility, ART, Derivatives Increasing Product-Price Complexity and Flexibility, ART, Derivatives, Disintermediation and Reintermediation, Disintermediation and Reintermediation Regulatory Mission, Competition, International Benchmarks, Regulatory Mission, Competition, International Benchmarks, Changing Pricing scenario / De-tariffing Changing Pricing scenario / De-tariffing Rapid rate of technology advancements & innovation Rapid rate of technology advancements & innovation Convergence of Institutions, Instruments, Intermediaries Convergence of Institutions, Instruments, Intermediaries Insurance Industry New Business Models CHALLENGING ENVIRONMENT

4 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.

5 FUNDAMENTALS OF AN IDEAL REGULATORY ENVIRONMENT PROTECTION OF THE CONSUMERPROTECTION OF THE CONSUMER PROMOTION OF THE INDUSTRYPROMOTION OF THE INDUSTRY COMPETITIVE NEUTRALITYCOMPETITIVE NEUTRALITY TRANSPARENCYTRANSPARENCY COST EFFECTIVENESSCOST EFFECTIVENESS ACCOUNTABILITYACCOUNTABILITY FLEXIBILITYFLEXIBILITY

6 PROTECTION ESTABLISH A REGULATORY FRAMEWORK TO PROVIDE ADEQUATE PROTECTION TO CONSUMERSESTABLISH A REGULATORY FRAMEWORK TO PROVIDE ADEQUATE PROTECTION TO CONSUMERS PREVENT /ENFORCE SUCH REGULATIONSPREVENT /ENFORCE SUCH REGULATIONS INSTIL PUBLIC CONFIDENCEINSTIL PUBLIC CONFIDENCE

7 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

8 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

9 SOURCES OF REGULATIONS * Laws / Statutes - Government *Formal Regulations - Regulations Non-formal Regulations - GuidelinesNon-formal Regulations - Guidelines Self-regulation - IndustrySelf-regulation - Industry Internal Regulation - Corporate GovernanceInternal Regulation - Corporate Governance

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

11 JUDICIARY * Decide on suits *Give interpretations *Decide on the legality of an insurance practice

12 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

13 DESIRABLE REQUIREMENTS Standardisation of clausesStandardisation of clauses Simplification of terms & coveragesSimplification of terms & coverages Full disclosureFull disclosure Avoidance of misleading/confusing clausesAvoidance of misleading/confusing clauses Definitions of termsDefinitions of terms List of Policy Prohibitions including list of permissible exclusionsList of Policy Prohibitions including list of permissible exclusions

14 SELLING METHODS LICENSING OF AGENTS / INTERMEDIARIESLICENSING OF AGENTS / INTERMEDIARIES AGENTSAGENTS CORPORATE AGENTSCORPORATE AGENTS BACASSURANCEBACASSURANCE BROKERSBROKERS SURVEYORSSURVEYORS TPASTPAS ADVERTISINGADVERTISING

15 POLICYHOLDER PROTECTION REGULATIONS POINT OF SALE – PROSPECTUSPOINT OF SALE – PROSPECTUS PROVIDE ALL MATERIAL INFORM - ATION TO DECIDE THE BEST COVERPROVIDE ALL MATERIAL INFORM - ATION TO DECIDE THE BEST COVER FOLLOW CODE OF CONDUCTFOLLOW CODE OF CONDUCT PROPOSAL OF INSURANCEPROPOSAL OF INSURANCE GRIEVANCE REDRESSAL PROCEEDUREGRIEVANCE REDRESSAL PROCEEDURE MATTERS TO BE STATED IN POLICYMATTERS TO BE STATED IN POLICY CLAIMS PROCEEDURECLAIMS PROCEEDURE POLICYHOLDER SERVICINGPOLICYHOLDER SERVICING DUTY OF INSUREDDUTY OF INSURED

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

17 GRIEVANCE ISSUE PROCESSES SETTLING INDIVIDUAL GRIEVANCESSETTLING INDIVIDUAL GRIEVANCES ANALYSIS OF GRIEVANCESANALYSIS OF GRIEVANCES CATEGORISING GRIEVANCESCATEGORISING GRIEVANCES 1.DELAY 2.STRUCTURAL/SERVICE ISSUES 3.POLICY/ CONTRACT ISSUES

18 REMOVING ROOT CAUSES ANALYSING ROOT CAUSESANALYSING ROOT CAUSES STUDY OF RULINGS, JUDGEMENTSSTUDY OF RULINGS, JUDGEMENTS EMPOWERED LEVELS TO TAKE CORRECTIVE ACTIONEMPOWERED LEVELS TO TAKE CORRECTIVE ACTION REVIEW RESULTSREVIEW RESULTS CHANGE OF PRACTICES, SYSTEMS, PRODUCTSCHANGE OF PRACTICES, SYSTEMS, PRODUCTS

19 IRDA GRIEVANCE CELL

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22 IRDA’S CONCERNS PROHIBITED SALES PRACTICES AND UNETHICAL INTERMEDIATION MISLEADING ADVERTISEMENTS FAILURE TO PROVIDE PROPER DISCLOSURES INSENSITIVITY TO CONSUMER WELFARE DELAYS

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

24 THANK YOU


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