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CUSTOMER CUSTOMER SERVICE -SERVICE -
REGULATORY REGULATORY VIEWVIEW
By By
PC James PC James
Executive Director, IRDAExecutive Director, IRDA
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Underdeveloped Markets
Emerging Markets
Mature Markets
•Motor insurance (3rd party liability)
• property insurance for large gov’t projects
• Marine and othertrade related
transport insurance • Commercial property insurance
Motor insurance(comprehensive)
•
• Liability insurance for businesses
Liability insurance for
individuals •• credit and financialinsurance 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
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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
New Business Models
CHALLENGING CHALLENGING ENVIRONMENTENVIRONMENT
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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.
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FUNDAMENTALS OF AN FUNDAMENTALS OF AN IDEAL REGULATORY IDEAL REGULATORY
ENVIRONMENTENVIRONMENT
• PROTECTION OF THE CONSUMERPROTECTION OF THE CONSUMER• PROMOTION OF THE INDUSTRYPROMOTION OF THE INDUSTRY• COMPETITIVE NEUTRALITYCOMPETITIVE NEUTRALITY• TRANSPARENCYTRANSPARENCY• COST EFFECTIVENESS COST EFFECTIVENESS • ACCOUNTABILITYACCOUNTABILITY• FLEXIBILITYFLEXIBILITY
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PROTECTIONPROTECTION
• ESTABLISH A REGULATORY ESTABLISH A REGULATORY FRAMEWORK TO PROVIDE FRAMEWORK TO PROVIDE ADEQUATE PROTECTION TO ADEQUATE PROTECTION TO CONSUMERSCONSUMERS
• PREVENT /ENFORCE SUCH PREVENT /ENFORCE SUCH REGULATIONSREGULATIONS
• INSTIL PUBLIC CONFIDENCEINSTIL PUBLIC CONFIDENCE
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PROMOTIONPROMOTION
** Provide a favourable climate for Provide a favourable climate for product development/intermediation product development/intermediation and healthy growth of insuranceand healthy growth of insurance
-- A reliable and stable marketA reliable and stable market-- Freedom of entrepreneurial Freedom of entrepreneurial
spiritspirit** Balance between degree of Balance between degree of
prudential regulation and degree of prudential regulation and degree of freedomfreedom
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COMPETITIVE COMPETITIVE NEUTRALITYNEUTRALITY
** Level playing field for all participantsLevel playing field for all participants
** Minimal entry and exit barriersMinimal entry and exit barriers
** No undue restrictions on institutions No undue restrictions on institutions or productsor products
** Well – defined rules of gameWell – defined rules of game
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SOURCES OF SOURCES OF REGULATIONSREGULATIONS
** Laws / Statutes Laws / Statutes - Government - Government
** Formal Regulations Formal Regulations - Regulations - Regulations
• Non-formal Regulations - GuidelinesNon-formal Regulations - Guidelines
• Self-regulation - IndustrySelf-regulation - Industry• Internal Regulation - Corporate Internal Regulation - Corporate
Governance Governance
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LAWLAW• MAKES GENERAL FRAMEWORK MAKES GENERAL FRAMEWORK
FOR THE INDUSTRYFOR THE INDUSTRYEG. INSURANCE ACT 1938EG. INSURANCE ACT 1938
IRDA ACT 1999IRDA ACT 1999
REGULATORREGULATOR• Issues specific rules & regulationsIssues specific rules & regulations• Responsibility for enforcementResponsibility for enforcement
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JUDICIARYJUDICIARY
** Decide on suitsDecide on suits
** Give interpretationsGive interpretations
** Decide on the legality of an Decide on the legality of an insurance practiceinsurance practice
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INSURANCE POLICY – FILE & INSURANCE POLICY – FILE & USEUSE
- policy to confirm to requirements policy to confirm to requirements imposed by statute/regulationimposed by statute/regulation
- policy to be consistent, not policy to be consistent, not ambiguous, misleading, unfair or ambiguous, misleading, unfair or inequitableinequitable
- the benefits provided are the benefits provided are reasonable in relation to the reasonable in relation to the premium chargedpremium charged
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DESIRABLE DESIRABLE REQUIREMENTSREQUIREMENTS
• Standardisation of clausesStandardisation of clauses• Simplification of terms & Simplification of terms &
coveragescoverages• Full disclosureFull disclosure• Avoidance of misleading/confusing Avoidance of misleading/confusing
clausesclauses• Definitions of termsDefinitions of terms• List of Policy Prohibitions List of Policy Prohibitions
including list of permissible including list of permissible exclusionsexclusions
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SELLING METHODSSELLING METHODS
• LICENSING OF AGENTS / LICENSING OF AGENTS / INTERMEDIARIESINTERMEDIARIES
• AGENTSAGENTS• CORPORATE AGENTSCORPORATE AGENTS• BACASSURANCEBACASSURANCE• BROKERSBROKERS• SURVEYORSSURVEYORS• TPASTPAS
•ADVERTISINGADVERTISING
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POLICYHOLDER PROTECTION POLICYHOLDER PROTECTION REGULATIONSREGULATIONS
• POINT OF SALE – PROSPECTUSPOINT OF SALE – PROSPECTUS• PROVIDE ALL MATERIAL INFORM -PROVIDE ALL MATERIAL INFORM -
ATION TO DECIDE THE BEST COVERATION TO DECIDE THE BEST COVER• FOLLOW CODE OF CONDUCTFOLLOW CODE OF CONDUCT• PROPOSAL OF INSURANCEPROPOSAL OF INSURANCE• GRIEVANCE REDRESSAL GRIEVANCE REDRESSAL
PROCEEDUREPROCEEDURE• MATTERS TO BE STATED IN POLICYMATTERS TO BE STATED IN POLICY• CLAIMS PROCEEDURECLAIMS PROCEEDURE• POLICYHOLDER SERVICINGPOLICYHOLDER SERVICING• DUTY OF INSUREDDUTY OF INSURED
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INSURANCE INSURANCE OMBUDSMANOMBUDSMAN
• INSURANCE OMBUDSMAN EXISTS INSURANCE OMBUDSMAN EXISTS FOR SPEEDY, CONVENIENT FOR SPEEDY, CONVENIENT REDRESSAL OF GRIEVANCES OF REDRESSAL OF GRIEVANCES OF INSURED THAT TOO AT MINIMUM INSURED THAT TOO AT MINIMUM COSTS.COSTS.
• OMBUDSMAN CAN DEAL WITH OMBUDSMAN CAN DEAL WITH PERSONAL LINES CLAIMS PERSONAL LINES CLAIMS (INCLUDING HEALTH INSURANCE) (INCLUDING HEALTH INSURANCE) UP TO RS.20 LACS.UP TO RS.20 LACS.
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GRIEVANCE ISSUE GRIEVANCE ISSUE PROCESSESPROCESSES
• SETTLING INDIVIDUAL SETTLING INDIVIDUAL GRIEVANCES GRIEVANCES
• ANALYSIS OF GRIEVANCESANALYSIS OF GRIEVANCES• CATEGORISING GRIEVANCESCATEGORISING GRIEVANCES
1.1. DELAYDELAY
2.2. STRUCTURAL/SERVICE ISSUESSTRUCTURAL/SERVICE ISSUES
3.3. POLICY/ CONTRACT ISSUESPOLICY/ CONTRACT ISSUES
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REMOVING ROOT REMOVING ROOT CAUSESCAUSES
• ANALYSING ROOT CAUSESANALYSING ROOT CAUSES• STUDY OF RULINGS, STUDY OF RULINGS,
JUDGEMENTSJUDGEMENTS• EMPOWERED LEVELS TO TAKE EMPOWERED LEVELS TO TAKE
CORRECTIVE ACTIONCORRECTIVE ACTION• REVIEW RESULTSREVIEW RESULTS• CHANGE OF PRACTICES, CHANGE OF PRACTICES,
SYSTEMS, PRODUCTSSYSTEMS, PRODUCTS
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IRDA GRIEVANCE CELLIRDA GRIEVANCE CELLDEPARTMENT WISE NON LIFE COMPLAINTS
RECEIVED(APR'05-MAR'06)
FIRE6%
MARINE2%
MOTOR25%
HEALTH48%
OMI15%
OTHERS4%
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IRDA GRIEVANCE CELLIRDA GRIEVANCE CELL
SOURCEWISE COMPLAINTS RECEIVED (APR'04-MAR'05)
Individuals87%
Company 13%
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IRDA GRIEVANCE CELLIRDA GRIEVANCE CELLNATUREWISE CATEGORISATION OF COMPLAINTS RECEIVED
DURING APR'05-MAR'06
52%
17%
27%4%
NON SETTLEMENT / DELAY INSETTLEMENT OF CLAIM
REPUDIATION / PARTIALSETTLEMENT OF CLAIM
POLICY ISSUES
OTHER REASONS
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IRDA’S CONCERNSIRDA’S CONCERNS
PROHIBITED SALES PRACTICES PROHIBITED SALES PRACTICES AND UNETHICAL INTERMEDIATIONAND UNETHICAL INTERMEDIATION
MISLEADING ADVERTISEMENTSMISLEADING ADVERTISEMENTS
FAILURE TO PROVIDE PROPERFAILURE TO PROVIDE PROPER
DISCLOSURESDISCLOSURES
INSENSITIVITY TO CONSUMER INSENSITIVITY TO CONSUMER
WELFAREWELFARE
DELAYSDELAYS
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THE WAY FORWARDTHE WAY FORWARD1.1. TIMELINESS. DECREASE PROCESS TIMELINESS. DECREASE PROCESS
DELAYS DELAYS 2.2. NEED FOR CLARITY & QUALITY IN NEED FOR CLARITY & QUALITY IN
COMMUNICATIONCOMMUNICATION3.3. CREATE PROCEDURES FOR QUICK CREATE PROCEDURES FOR QUICK
DECISION MAKINGDECISION MAKING4.4. CONVEY WRITTEN DECISIONS & IF CONVEY WRITTEN DECISIONS & IF
NEGATIVE WITH REASONS NEGATIVE WITH REASONS 5.5. RECORD REASONS IN FILERECORD REASONS IN FILE6.6. INFORM AVAILABILITY OF EXTERNAL INFORM AVAILABILITY OF EXTERNAL
REMEDIES IF NOT RESOLVED REMEDIES IF NOT RESOLVED INTERNALLY.INTERNALLY.
7.7. USE PROCEDURES THAT INCREASEUSE PROCEDURES THAT INCREASE CONSUMER ACCESSCONSUMER ACCESS
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THANK YOUTHANK YOU