III IC-14 key terms

The layered set of laws governing insurance in India: the Insurance Act, 1938, the IRDA Act, 1999, rules notified by the central government, regulations made by IRDAI, and the circulars and guidelines issued by the regulator.

The withdrawal of government-fixed uniform premium rates for most non-life products from 2007, leaving insurers free to price risks commercially, except for motor third-party liability where rates continue to be administered.

A statutory body constituted under the IRDA Act, 1999 to advise IRDAI on regulatory matters, drawing members from insurers, intermediaries, consumers and government, but having no executive or decision-making power of its own.

The principal statute regulating the conduct of insurance business in India, covering registration of insurers, capital and solvency, policy terms such as nomination and assignment, licensing of intermediaries, and powers of the regulator.

The licence granted by IRDAI under Section 3 of the Insurance Act, 1938 permitting a company to carry on life, general or health insurance business, conditional on continuing compliance with capital, deposit and solvency requirements.

A provision of the Insurance Act, 1938 that bars an insurer from assuming any risk unless the premium is received in advance or is guaranteed by a bank, so that cover is conditional on payment of premium.

The provision in the Insurance Act, 1938 stating that a life policy cannot be called in question after three years from issuance for any reason, and before that only on specified grounds such as fraud or misrepresentation, following the prescribed procedure.

The capital an insurer must hold to be registered in India, set at one hundred crore rupees under the Insurance Act, 1938, and supplemented by deposit and solvency requirements prescribed by IRDAI.

The excess of the value of an insurer's assets over its liabilities, expressed as a ratio of the required solvency margin; Indian insurers must maintain at least 1.5 times the control level at all times.

The right of a policyholder under Section 39 of the Insurance Act, 1938 to name a person who will receive the policy money on the holder's death, so that the benefit does not fall into the general estate.

The transfer of a life insurance policy and the rights under it to another person, made under Section 38 of the Insurance Act, 1938 either by endorsement on the policy itself or by a separate instrument.

A qualified actuary appointed by an insurer with IRDAI approval, responsible for certifying product pricing, reserves, solvency and the actuarial report, and for advising the board on insurance risk matters.

A person licensed by IRDAI under Section 64UM of the Insurance Act, 1938 to assess and report on losses for general insurance claims above the prescribed thresholds before the insurer settles them.

The statute that created the Insurance Regulatory and Development Authority, ended the monopoly of public sector insurers, and set out the regulator's composition, powers, functions and duties.

The Insurance Regulatory and Development Authority of India, a statutory body set up in 2000 with headquarters at Hyderabad, which licenses insurers and intermediaries and regulates products, solvency, market conduct and grievance redressal.

The process by which an insurer submits policy wording, premium and terms to IRDAI before marketing a product, under either the file-and-use or the use-and-file route depending on the class of business.

The maximum shareholding permitted to foreign investors in an Indian insurance company, currently 74 per cent, with the balance required to be held by Indian residents under the insurance rules.

The statute that nationalised life insurance in India, merged 245 private insurers and provident societies into the Life Insurance Corporation of India, and defined its capital, functions and policyholder profit sharing.

The statute that nationalised general insurance, created the General Insurance Corporation of India and its four subsidiaries, and made GIC the country's reinsurer of last resort.

The obligation of every general insurer in India to cede a fixed percentage of each reinsurance programme to the national reinsurer, GIC, at the rate prescribed by IRDAI in its reinsurance regulations.

The Indian statute codifying the law of marine insurance, covering insurable interest, warranties, voyage and time policies, total and partial losses, salvage, and the insurer's rights of subrogation.

The law governing road transport in India, which makes third-party liability insurance compulsory for every motor vehicle and provides the framework for accident claims and compensation.

Insurance that indemnifies the insured against legal liability for death, bodily injury or property damage caused to third parties, and which is compulsory for motor vehicles under the Motor Vehicles Act.

The statute protecting consumers of goods and services, including insurance, by creating district, state and national commissions and a Central Consumer Protection Authority, and allowing complaints for deficiency in service.

The right of an insurer, after paying a claim, to step into the insured's shoes and recover the loss from the party responsible, so that the insured cannot recover the same loss twice.

An individual licensed by IRDAI to solicit and procure insurance business on behalf of one or more insurers, subject to prescribed training, examination and commission rules.

A firm, company, bank or similar entity registered by IRDAI to distribute insurance products of insurers, subject to limits on the number of life, general and health insurers it may represent.

An intermediary licensed by IRDAI who acts for the buyer rather than the insurer, advising on risk and placing cover, and who is paid brokerage that must be disclosed to the client.

The distribution of insurance products through bank branches and bank staff, operating either under a corporate agency arrangement or under a referral model permitted by IRDAI.

An online platform registered with IRDAI that displays and compares insurance products of different insurers and passes leads to them, but does not itself conclude the sale of a policy.

A company licensed by IRDAI to administer health insurance claims, including processing, verification and settlement support, on behalf of a health insurer for a prescribed fee.

IRDAI's directions on board composition, independent directors, board committees, risk management, disclosure and internal controls that insurers must follow to ensure sound management and protect policyholders.

The process of identifying and verifying a customer's identity and understanding the source of funds at the start of and during the insurance relationship, as required by anti-money laundering law and IRDAI instructions.

The Prevention of Money Laundering Act, 2002, which makes insurers reporting entities obliged to maintain records, verify customer identity and report suspicious and cash transactions to the Financial Intelligence Unit.

IRDAI's guidelines requiring insurers to adopt a fraud risk management policy, designate a fraud monitoring officer, detect and investigate fraud, and report specified cases to the regulator.

IRDAI regulations of 2017 setting standards for proposal forms, disclosure, policy documents, claims handling, grievance redressal and service timelines that insurers must follow when dealing with policyholders.

A window after receipt of the policy document within which the policyholder may cancel a new policy and receive a refund of premium less proportionate risk and expenses, as prescribed by IRDAI.

An officer designated by an insurer to receive and resolve policyholder complaints, whose details must be displayed, and who must address grievances within IRDAI's timelines before the complainant can approach the Ombudsman.

A quasi-judicial authority appointed under the Insurance Ombudsman Rules, 2017 to settle individual policyholders' complaints against insurers free of cost, by mediation or by a written award binding on the insurer.