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Radhika Menon

Inspections conducted by IRDA check on compliance with guidelines such as solvency margins, breach of tariffs, claim payment procedures, commission payments, agency norms and redress of grievances. The regulator is also concerned about the quality of training for agents.

Mumbai , Oct. 10

THE Insurance Regulatory and Development Authority is strengthening its inspection mechanism to keep a closer tab on the business activities of insurance companies. The regulator is working on streamlining the process of inspection, Mr C.S. Rao, Chairman, IRDA, told Business Line.

Mr Rao said the regulator would either have a separate inspection department or depute nodal officers who deal with actuarial, investment and accounts matters for the purpose.

The Chairman said currently the regulator monitors three areas: investment, market conduct, and accounts. With respect to investment norms, inspection is currently outsourced to chartered accountant firms, which examine reports and check compliance.

Besides the annual inspection of accounts furnished by insurance companies, IRDA also scrutinises market conduct issues as and when they come up, said Mr Rao.

"We will depute three to four people for the purpose of inspection," said Mr Rao.

While regulators such as the RBI have an independent inspection department, IRDA has been conducting its inspections through chartered accountants and senior or retired officials from the insurance industry.

Analysts in the insurance industry believe setting up an inspection department would imply a closer watch on the sector. According to a senior official from a private general insurance company, the current system of inspection is fairly robust and setting up a department will imply further tightening of the process. Inspections conducted by IRDA check on compliance with guidelines such as solvency margins, breach of tariffs, claim payment procedures, commission payments, agency norms and redress of grievances.

The regulator has been particularly concerned about the quality of training in institutes imparting insurance education.

There have been reports of several unauthorised training centres providing certification to agents and IRDA is believed to be conducting a probe to study the situation.

While the regulator has already issued norms for corporate agents and limited the selling of keyman insurance to term policies, on the anvil are guidelines for the sale of unit linked insurance polocies and group insurance.

The senior LIC official said the issue of qualified manpower had prevented IRDA from setting up a department so far. "With so many new companies, there are very few senior actuaries or qualified senior insurance officials. LIC, for instance, has 2,048 branch offices. It will take about two to three months for ten officials to inspect 50 branches," said the official.

With around 14 insurance companies each in the life and non-life segments as well as components like agents, brokers and TPAs, the insurance industry is growing rapidly.

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