What does IRDA License mean?
The Controller of Insurance under the Insurance Act, 1938 regulates the Insurance market in India until 1999. Nevertheless, the creation of IRDA made perceived the need for a revival in the insurance sector, as most of the earlier laws became outmoded in the present scenario.
What is the defined scope of IRDA?
Below mentioned points are covered by the new IRDA regulations in insurance area:
- The procedure of obtaining license of insurance from IRDA;
- The procedure of obtaining approval of insurance products from IRDA; and
- The procedure for appointment of insurance intermediary.
What are the procedures for granting license to companies to start their insurance business?
It is obligatory for each entity to acquire a Certificate from the Authority before holding out any insurance business. Licenses of different classes of insurance may be purchased from IRDA, such as life insurance, fire insurance, marine insurance, etc. Nevertheless, it must be borne in mind that the life insurance company is not associated with any other type of insurance sector.
The IRDA license is compulsory. Also old insurance companies, such as National Insurance, General Insurance, Oriental Insurance, etc., are required to obtain a new certificate within 3 months of the date of the enactment of this Act. Insurers prohibited from obtaining a license under the previous Law are bound by this Act.
How to file registration Certificate application before IRDA
In the specified form IRDA/R1, application for the Registration certificate shall be made which shall be supported by the below mentioned documents:
- The certified copy of the Memorandum of Association (MOA) and Articles of Association (AOA);
- Directors and shareholderÃ¢â¬â¢s name, address and occupation shall be submitted;
- Class of insurance business proposed to be carried on shall be disclosed through the submission of a statement.
- The statement specifying the sources of capital funds.
The initial application will be checked by IRDA and additional details may be needed. The Authority may also nominate a Principal Officer to obtain some data or explanation on their behalf.
Second Stage for IRDA License
Below mentioned documents shall be required in case additional application in the specified form is asked by the authority after obtaining the satisfaction about the information and documents provided along with the Form IRDA/R1:
- Every entity shall deposit either in cash or in securities , partly in cash and party in securities, the following:
- In the case of a life insurance company, not exceeding INR 10 crore, 1% of the total gross premium paid in India in the previous year;
- In the case of general insurance company, not reaching INR 10 crore, 3% of the total gross premium paid in India in the previous year;
- A total of INR 20 crores in the event of a reinsurance business;
- Only in case of marine business, a total of INR 1 lac/-;
- The certificate showing the amount deposited with the Reserve Bank of India.
- Document demonstrating the decision provided by the Principal Officer regarding the fulfillment of the minimum capital requirements. The capital minimum is 20 crores for reinsurance and 10 crores for life insurance and general insurance.
- A version of the certified public prospectus and the policy reform of the insurer.
- Statement of insurance rates, rewards, terms and conditions involved with insurance policies.
- Actuary certificate on interest rate.
- For each class of business, a deposit of INR 50,000/-.
- If any international promoter is concerned, a certified version of the MOU between the Indian and the International Promoter shall be provided..
- Any other document asked for by the authority.
Grant of Registration Certificate for Insurance business in India
The IRDA shall grant the Certificate of Registration to the insurer after receipt of the application and upon being satisfied with the following conditions. Below mentioned are the terms:
- A sound financial position and the overall quality of the board;
- Adequate size, capital structure and earning opportunities of the applicant company;
- The fulfillment of the general public concern.
On what grounds Registration for insurance operations can be refused?
Below mentioned are the grounds upon which can be refused:
- Inadequate or wrong data provided;
- Information provided but not on stipulated time;
- Capital requirements are not met by the applicant company;
- Management activities are not conducted properly;
- Any other as decided by the Authority.
If the claimant is denied registration as an insurer, he can appeal to the Central Government within 30 days from the date of issuance of a copy of the judgment by the Authority
When the decision of the government is final, such case cannot be appealed against in any court of law in case of registration of insurance.
What is the provision of Cancellation of Registration?
Where the law and regulations as specified are not complied with by the insurance company, then in such case Authority reserves the right to cancel the registration either wholly or in part.
What is the provision of Renewal of Registration?
Registration for insurance shall be renewed each year and the renewal submission shall be made by 31 December of the previous year following the renewal for registration year, together with the charges set out below:
- Lower of 1/4th of the 1% of the premium received during the year or INR 5 crores;
- For each class of insurance, the fees should not be less than 50,000/-;
- 1/4 of 1% of the premium earned in India during the year for reinsurance companies;
The renewal fees shall be paid to the Reserve Bank of India.