IRDAI POSP General cheat sheet

IRDAI is a statutory body established under the Insurance Regulatory and Development Authority Act, 1999; it was constituted in 2000 with its headquarters at Hyderabad.

Section 14 of the IRDA Act, 1999 lists the Authority's duties: issuing certificates of registration, protecting policyholders' interests, regulating investment and solvency, and promoting efficiency in insurance business.

The IRDA Act was amended by the Insurance Laws (Amendment) Act, 2015, which raised the foreign investment cap in Indian insurers to 49 percent and created the Securities Appellate Tribunal route for appeals against IRDAI orders.

Registration is mandatory: no person may carry on life, general, health, or reinsurance business in India without a certificate of registration granted by IRDAI under the Insurance Act, 1938.

Capital requirements: a life insurer or general insurer needs minimum paid-up equity capital of Rs 100 crore; a health insurer, a reinsurer, and a foreign reinsurance branch each need Rs 200 crore.

Solvency control level is 150 percent of the required solvency margin; insurers must maintain a minimum solvency ratio of 1.5 at all times and report it to IRDAI every quarter.

IRDAI has delegated several functions to the Insurance Information Bureau (IIB) for data, and policyholder education to the Consumer Education and Protection Department; grievances are handled by IRDAI's Consumer Affairs Department.

Insurance agents, corporate agents, and POSPs are licensed or certified under IRDAI regulations; a POSP works under an insurer or an insurance intermediary and cannot sell without a valid certificate issued through the training and certification process.

IRDAI issues regulations, master circulars, and guidelines, and can impose penalties, cancel registrations, and issue directions to insurers, intermediaries, and agents for violations.

Insurance is a contract of indemnity for non-life: the insured is restored to the pre-loss financial position, not better off; life insurance is a benefit contract, not strictly indemnity.

Insurable interest must exist at the time of the contract for life insurance and at the time of the loss for general insurance; without it the contract is void.

Utmost good faith (uberrima fides) requires both parties to disclose all material facts; non-disclosure or misrepresentation on a proposal form can allow the insurer to repudiate the claim.

Proximate cause means the dominant, effective cause of loss; where an insured peril is the proximate cause, the claim is payable even if a remote excluded peril contributed.

The principle of contribution applies when two or more policies cover the same risk and the same subject matter; each insurer pays its rateable proportion, and the insured cannot profit.

Subrogation transfers the insured's right of recovery against a negligent third party to the insurer, up to the amount paid, after settlement of the claim.

Average clause: if the sum insured is less than the value of the property, the insurer pays claim multiplied by sum insured divided by value at risk, applied under fire and similar property policies.

Deductible and excess reduce the claim payable; a franchise means the insurer pays nothing if the loss is below the stated amount, but the full loss if it exceeds that amount.

Premium is built from the pure risk premium plus loading for expenses, contingency, and profit; the insurer's technical reserves and solvency margin back the promises made to policyholders.

Mandatory motor third-party liability: no vehicle may be used in a public place without at least third-party liability cover; own-damage cover is optional and can be added to the same policy.

Motor own-damage premium is based on the Insured Declared Value (IDV), which is the current market value of the vehicle; IDV is reduced at renewal and is the maximum sum insured for own-damage claims.

Standard products mandated by IRDAI include Saral Suraksha Bima (personal accident), Arogya Sanjeevani (health), Saral Motor, Saral Griha Raksha (home), and the standard fire and special perils policy.

The Standard Fire and Special Perils policy covers fire, lightning, explosion, aircraft damage, riot, strike, malicious damage, storm, flood, inundation, subsidence, landslide, and missile testing; earthquake is covered only if added.

Marine insurance covers hull and cargo; the Marine Insurance Act, 1963 applies, and cargo policies are typically institute cargo clauses with warehouse-to-warehouse cover.

Health insurance covers hospitalisation, day-care procedures, and pre- and post-hospitalisation expenses; pre-existing diseases are covered after the waiting period stated in the policy schedule.

Personal accident policies pay for accidental death, permanent total disability, permanent partial disability, and temporary total disability, expressed as a percentage of the sum insured.

Business interruption or fire loss of profits policy indemnifies loss of gross profit and increased cost of working following an insured material damage loss.

A no-claim bonus reduces the motor own-damage premium at renewal if no claim was made, whereas a claim-free year has no effect on the third-party premium, which is tariffed.

Free-look period: the policyholder may return a policy within 15 days of receipt (30 days for distance marketing) and receive a refund of premium less proportionate risk premium and expenses.

Insurers must appoint a Grievance Redressal Officer and resolve complaints within 14 days; if unresolved or unsatisfied, the policyholder may approach IRDAI's IGMS portal or the insurer's GRO again.

The Insurance Ombudsman, established under the Insurance Ombudsman Rules, 2017, handles complaints up to Rs 30 lakh and must pass an award within three months of receiving the complaint.

An insured may approach the consumer forum or a civil court instead of the Ombudsman; the Ombudsman's award is binding on the insurer if accepted by the complainant within 30 days.

IRDAI's IGMS (Integrated Grievance Management System) is the online portal where policyholders can register and track complaints against insurers and intermediaries.

Mis-selling, rebating of commission, and inducing a policyholder to lapse an existing policy are prohibited practices; agents must disclose their commission and not make false promises of returns.

The proposal form must be filled truthfully; the agent must explain exclusions, waiting periods, and claim procedure, and must not sign on behalf of the prospect.

Know Your Customer (KYC) is mandatory for all policies; the agent must verify identity and address documents and record the source of funds where required.

Policyholders receive a policy document, schedule, and endorsements; any change in terms requires written endorsement, and premium payment must be acknowledged with a receipt.

IRDAI is a statutory body established under the Insurance Regulatory and Development Authority Act, 1999; it was constituted in 2000 with its headquarters at Hyderabad.

Section 14 of the IRDA Act, 1999 lists the Authority's duties: issuing certificates of registration, protecting policyholders' interests, regulating investment and solvency, and promoting efficiency in insurance business.

The IRDA Act was amended by the Insurance Laws (Amendment) Act, 2015, which raised the foreign investment cap in Indian insurers to 49 percent and created the Securities Appellate Tribunal route for appeals against IRDAI orders.

Registration is mandatory: no person may carry on life, general, health, or reinsurance business in India without a certificate of registration granted by IRDAI under the Insurance Act, 1938.

Capital requirements: a life insurer or general insurer needs minimum paid-up equity capital of Rs 100 crore; a health insurer, a reinsurer, and a foreign reinsurance branch each need Rs 200 crore.

Solvency control level is 150 percent of the required solvency margin; insurers must maintain a minimum solvency ratio of 1.5 at all times and report it to IRDAI every quarter.

IRDAI has delegated several functions to the Insurance Information Bureau (IIB) for data, and policyholder education to the Consumer Education and Protection Department; grievances are handled by IRDAI's Consumer Affairs Department.

Insurance agents, corporate agents, and POSPs are licensed or certified under IRDAI regulations; a POSP works under an insurer or an insurance intermediary and cannot sell without a valid certificate issued through the training and certification process.

IRDAI issues regulations, master circulars, and guidelines, and can impose penalties, cancel registrations, and issue directions to insurers, intermediaries, and agents for violations.

Insurance is a contract of indemnity for non-life: the insured is restored to the pre-loss financial position, not better off; life insurance is a benefit contract, not strictly indemnity.

Insurable interest must exist at the time of the contract for life insurance and at the time of the loss for general insurance; without it the contract is void.

Utmost good faith (uberrima fides) requires both parties to disclose all material facts; non-disclosure or misrepresentation on a proposal form can allow the insurer to repudiate the claim.

Proximate cause means the dominant, effective cause of loss; where an insured peril is the proximate cause, the claim is payable even if a remote excluded peril contributed.

The principle of contribution applies when two or more policies cover the same risk and the same subject matter; each insurer pays its rateable proportion, and the insured cannot profit.

Subrogation transfers the insured's right of recovery against a negligent third party to the insurer, up to the amount paid, after settlement of the claim.

Average clause: if the sum insured is less than the value of the property, the insurer pays claim multiplied by sum insured divided by value at risk, applied under fire and similar property policies.

Deductible and excess reduce the claim payable; a franchise means the insurer pays nothing if the loss is below the stated amount, but the full loss if it exceeds that amount.

Premium is built from the pure risk premium plus loading for expenses, contingency, and profit; the insurer's technical reserves and solvency margin back the promises made to policyholders.

Mandatory motor third-party liability: no vehicle may be used in a public place without at least third-party liability cover; own-damage cover is optional and can be added to the same policy.

Motor own-damage premium is based on the Insured Declared Value (IDV), which is the current market value of the vehicle; IDV is reduced at renewal and is the maximum sum insured for own-damage claims.

Standard products mandated by IRDAI include Saral Suraksha Bima (personal accident), Arogya Sanjeevani (health), Saral Motor, Saral Griha Raksha (home), and the standard fire and special perils policy.

The Standard Fire and Special Perils policy covers fire, lightning, explosion, aircraft damage, riot, strike, malicious damage, storm, flood, inundation, subsidence, landslide, and missile testing; earthquake is covered only if added.

Marine insurance covers hull and cargo; the Marine Insurance Act, 1963 applies, and cargo policies are typically institute cargo clauses with warehouse-to-warehouse cover.

Health insurance covers hospitalisation, day-care procedures, and pre- and post-hospitalisation expenses; pre-existing diseases are covered after the waiting period stated in the policy schedule.

Personal accident policies pay for accidental death, permanent total disability, permanent partial disability, and temporary total disability, expressed as a percentage of the sum insured.

Business interruption or fire loss of profits policy indemnifies loss of gross profit and increased cost of working following an insured material damage loss.

A no-claim bonus reduces the motor own-damage premium at renewal if no claim was made, whereas a claim-free year has no effect on the third-party premium, which is tariffed.

Free-look period: the policyholder may return a policy within 15 days of receipt (30 days for distance marketing) and receive a refund of premium less proportionate risk premium and expenses.

Insurers must appoint a Grievance Redressal Officer and resolve complaints within 14 days; if unresolved or unsatisfied, the policyholder may approach IRDAI's IGMS portal or the insurer's GRO again.

The Insurance Ombudsman, established under the Insurance Ombudsman Rules, 2017, handles complaints up to Rs 30 lakh and must pass an award within three months of receiving the complaint.

An insured may approach the consumer forum or a civil court instead of the Ombudsman; the Ombudsman's award is binding on the insurer if accepted by the complainant within 30 days.

IRDAI's IGMS (Integrated Grievance Management System) is the online portal where policyholders can register and track complaints against insurers and intermediaries.

Mis-selling, rebating of commission, and inducing a policyholder to lapse an existing policy are prohibited practices; agents must disclose their commission and not make false promises of returns.

The proposal form must be filled truthfully; the agent must explain exclusions, waiting periods, and claim procedure, and must not sign on behalf of the prospect.

Know Your Customer (KYC) is mandatory for all policies; the agent must verify identity and address documents and record the source of funds where required.

Policyholders receive a policy document, schedule, and endorsements; any change in terms requires written endorsement, and premium payment must be acknowledged with a receipt.