IRDAI POSP General flashcards

32 cards. Read the term and the definition here. The deck at the top of this page is optional.

IRDA Act, 1999

The statute that created IRDAI as the insurance regulator, defining its composition, powers, duties, and functions. It came into force in 2000 and was amended in 2015 by the Insurance Laws (Amendment) Act.

Certificate of registration

The licence granted by IRDAI under the Insurance Act, 1938 that allows an insurer to carry on insurance business in India. No insurer may transact business without it.

Solvency ratio

The ratio of an insurer's available solvency margin to its required solvency margin. IRDAI requires a minimum of 1.5, meaning assets must exceed liabilities by 50 percent more than the prescribed margin.

Minimum paid-up capital

The equity capital IRDAI requires before registration: Rs 100 crore for life and general insurers, and Rs 200 crore for health insurers, reinsurers, and foreign reinsurance branches.

POSP

Point of Sales Person: a person certified by an insurer or intermediary under IRDAI norms to sell specified simple products such as motor, travel, personal accident, and standard health policies after training and an examination.

Insurance Information Bureau

An IRDAI-supported data repository that collects and analyses insurance statistics from insurers and intermediaries, supporting pricing, fraud detection, and regulatory oversight of the Indian insurance market.

Policyholders' interests duty

Section 14 of the IRDA Act makes protection of policyholders' interests a core duty of IRDAI, alongside regulating solvency, investments, and the conduct of insurers, agents, and intermediaries.

Insurable interest

A financial relationship in which the insured benefits from the continued existence of the subject matter or suffers loss from its damage. It must exist at inception for life and at loss for general insurance.

Utmost good faith

The duty on both insurer and insured to disclose all material facts relevant to the risk. Breach by the insured through non-disclosure or misrepresentation can allow the insurer to avoid the contract.

Indemnity principle

The insured is restored to the same financial position as before the loss, no better and no worse. It governs non-life insurance and underpins subrogation, contribution, and the average clause.

Proximate cause

The dominant and effective cause of a loss, determined by a continuous chain of events. If the proximate cause is an insured peril, the claim is payable even if a remote excluded peril contributed.

Subrogation

After paying a claim, the insurer acquires the insured's legal right to recover the loss from a negligent third party, limited to the amount paid, so the insured cannot recover twice.

Contribution between policies

When two or more policies cover the same subject matter and risk, each insurer pays its rateable proportion of the loss. The insured cannot recover more than the actual loss.

Average clause

A condition in property policies that reduces the claim if the sum insured is below the property's value. Claim paid equals loss multiplied by sum insured divided by value at risk.

Deductible versus franchise

A deductible is subtracted from every claim before payment. A franchise pays nothing if the loss is below the stated amount but pays the full loss once that amount is exceeded.

Moral hazard

The risk that the insured's behaviour becomes less careful, or that a loss is deliberately caused or exaggerated, because insurance exists. Insurers counter it with deductibles, exclusions, and claim investigation.

Motor third-party liability

Compulsory cover under the Motor Vehicles Act requiring every vehicle used in a public place to have at least third-party liability insurance, protecting others against death, injury, or property damage.

Insured Declared Value

The current market value of a vehicle, agreed at inception and shown in the policy schedule. It is the maximum amount payable for a total loss under own-damage cover.

Standard fire policy

A tariff-based property policy covering fire, lightning, explosion, riot, storm, flood, and similar perils, with add-on covers such as earthquake and terrorism available on payment of extra premium.

Marine cargo cover

Insurance of goods in transit by sea, air, rail, or road, typically on warehouse-to-warehouse terms under institute cargo clauses, covering perils of the voyage selected by the clause chosen.

Personal accident policy

A non-life policy paying a stated sum insured for accidental death, permanent total disability, or permanent partial disability, and weekly benefits for temporary total disability, as per the policy schedule.

Business interruption cover

A policy that indemnifies loss of gross profit and increased cost of working caused by a reduction in turnover following an insured material damage loss, usually for a stated indemnity period.

Arogya Sanjeevani

An IRDAI-mandated standard health indemnity policy offering uniform basic coverage, sum insured from Rs 1 lakh to Rs 5 lakh, with defined room rent limits, co-payment, and waiting periods across all insurers.

No-claim bonus

A discount on the motor own-damage premium at renewal if no claim was made in the preceding policy year. It increases with claim-free years and is forfeited when a claim is made.

Free-look period

The right to return a new policy within 15 days of receipt, or 30 days for distance marketing, and receive a refund of premium less proportionate risk premium and expenses incurred by the insurer.

Grievance Redressal Officer

An officer every insurer must appoint to receive and resolve policyholder complaints within 14 days. The GRO's decision can be escalated to the Ombudsman or consumer forum.

Insurance Ombudsman

A quasi-judicial authority under the Insurance Ombudsman Rules, 2017 that hears complaints up to Rs 30 lakh and passes an award within three months, binding on the insurer if accepted.

IGMS portal

IRDAI's Integrated Grievance Management System, an online platform where policyholders register complaints against insurers and intermediaries and track their resolution status.

Mis-selling

Selling a policy by misrepresenting its features, benefits, exclusions, or returns, or by suppressing material information, which is a prohibited practice and grounds for disciplinary action against the agent.

Rebating

Offering part of the agent's commission or any inducement to a prospect to persuade them to buy a policy. It is prohibited under the Insurance Act and can lead to penalty or licence cancellation.

KYC requirement

Know Your Customer: mandatory verification of the policyholder's identity and address using prescribed documents, along with checks on source of funds, before issuing a policy or accepting premiums.

Proposal form accuracy

The proposer must answer all questions truthfully and sign the form personally. The agent must not fill in answers for the proposer or sign on their behalf, as this can invalidate a claim.