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Showing posts with label IRDA. Show all posts
Showing posts with label IRDA. Show all posts

Wednesday, 1 August 2018

19:09

LIC to acquire controlling stake of IDBI Bank

LIC to acquire controlling stake of IDBI Bank 
Cabinet approves dilution of Government shareholding below 50%       
The Union Cabinet chaired by Prime Minister Shri Narendra Modi has approvedconveying of no objection to reduction in Government of India shareholding in IDBI Bank Limited to below 50% by dilution.  It has also approved acquisition of controlling stake by Life Insurance Corporation of India (LIC) as promoter in the bank through preferential allotment / open offer of equity, and relinquishment of management control by the Government in the bank. 
Impact:
The acquisition has wide-ranging synergy benefits for customers, LIC and the bank.
Benefits to the two entities emanate from economies of scale, reduction in the costs of distribution and customer acquisition, greater efficiency and flexibility in operations, and greater opportunity for cross-selling of products and services.
These would help financially strengthen both LIC and the bank, as well as their subsidiaries which offer financial products such as housing finance and mutual funds.
Further, the bank would get an opportunity to tap 11 lakh LIC agents for doorstep banking services, positioning it to improve customer services and deepen financial inclusion.
The bank would also be positioned to benefit in terms of lower cost of funds through acquisition of low-cost deposits, and fee income from payment services.
LIC would get bancassurance (i.e. selling of insurance products by bank) through the bank's network of 1,916 branches, besides access to bank's cash management services.
Further, LIC would gain in terms of furthering the realisation of its vision of becoming a financial conglomerate.
Customers too would benefit through wider offerings of financial services under one roof, and LIC being better positioned to expand life insurance coverage.
Background:
In 2016, the Finance Minister, in his Budget Speech announced that the process of transformation of IDBI Bank has started and that Government will take it forward and also consider the option of reducing its stake below 50%. Taking note of this announcement, with the approval of its Board, LIC sought permission of the Insurance Regulatory and Development Authority of India (IRDAI) for acquiring controlling stake in IDBI Bank. After receipt of IRDAI's permission and carrying out diligence, LIC expressed its interest in acquiring 51% controlling stake to IDBI Bank. The bank in turn, after consideration of this offer by its Board, sought Government's decision in the context of Government's stake coming down below 51% as a result of the proposed acquisition.

 Source:PIBNEWS
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Sunday, 26 March 2017

15:38

GENERAL INSURANCE PREMIUM TO COST MORE FROM APRIL 1,2017

GENERAL INSURANCE PREMIUM TO COST MORE FROM APRIL 1,2017

NEW DELHI, MAR 26: 
Car, motorcycle and health insurance will cost more from April 1 with regulator Insurance Regulatory and Development Authority of India (IRDAI) giving go-ahead to insurers for revision in commission for agents.

The change in premium after modification will be limited to +/ 5 per cent of the existing rates.
The increase will be in addition to the enhanced third party motor insurance rates, which too will come into affect from April.
The IRDAI (Payment of Commission or Remuneration or Reward to Insurance Agents and Insurance Intermediaries) Regulations, 2016 comes into effect from April 1, 2017.
The regulations, the regulator said, bring about certain revisions in commission/ remuneration rates and also introduce the reward system.
These may trigger insurers to revisit the pricing of their products in so far as the costing input relating to commission or remuneration is concerned, said the IRDAI.
However, the change in premium due to the new regulations should be “limited to +/-5 per cent of the existing premium rates of products/add-ons”, it said.
Further, insurers will have to give a certificate that there is “no detrimental change” in premium rates or any other provision of policies already sold.

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Saturday, 18 March 2017

07:44

Assessing the Performance of Private Insurance Companies

Assessing the Performance of Private Insurance Companies 

As per Insurance regulatory and Development Authority of India (IRDAI), the performance of private insurance companies are assessed through the following: -

i.)Analysis of the financial statements and corporate governance report of the insurance companies on annual basis.
ii.) Analysis of the statement of expenses of management and payment of commission on an annual basis.
iii.)Analysis of the unclaimed amount of policyholders on half-yearly basis.
iv.)Monitoring/review of the various returns filed by the insurance companies under the Public Disclosures.
v.)Compliance of the returns regarding the statutory auditors on an annual basis.
vi.)Analysis of the solvency returns filed by the non-life insurance companies on a quarterly basis.
vii.) Offsite monitoring is done on an ongoing basis, which includes review of various returns / reports filed Monthly, Quarterly, Half-yearly and Annually by all the insurance companies as per the provisions of the statute and the regulations. This includes among others, New Business Performance, Claims performance and Grievance Redressal.
viii.) The Authority carries out periodical onsite inspection of the insurers to examine the compliance of the insurers to various statutory and regulatory provisions. In case of any deviations / violations are noticed, appropriate regulatory actions are taken including directing the insurers to initiate corrective actions, wherever necessary.
ix.)The Authority also takes into cognizance any violations observed during the course of reviewing the complaints received from the customers and initiates suitable corrective measures wherever required.

Further, IRDAI publishes a comprehensive Annual Report containing the performance of both public and private sector insurance companies, various regulatory initiatives taken and the major trends of the Insurance Sector. This report is placed on the table of the Parliament every year. This report also contains the Regulatory actions taken against insurance companies.

The Insurance Laws (Amendment) Act, 2015 empowers IRDAI to initiate prosecution with fine and imprisonment upto 10 years for violation of insurance related legislations and also to initiate adjudication proceedings and levy penalties upto Rs.25 crore.

This was stated by Shri Santosh Kumar Gangwar, Minister of State in the Ministry of Finance in written reply to a question in Lok Sabha on 17.03.2017.
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Tuesday, 30 August 2016

07:35

18th Meeting of the FSDC Sub-Committee held in Mumbai

18th Meeting of the FSDC Sub-Committee held in Mumbai

A meeting of the Sub-Committee of the Financial Stability and Development Council (FSDC) was held today in Mumbai. Dr. Raghuram G. Rajan, Governor, Reserve Bank of India, chaired the meeting. The meeting was attended by the members of the Sub-Committee - Shri Ashok Lavasa, Finance Secretary, Shri T. S. Vijayan, Chairman, Insurance Regulatory and Development Authority of India (IRDAI), Shri Hemant G. Contractor, Chairman, Pension Funds Regulatory and Development Authority (PFRDA), Deputy Governors of the Reserve Bank, Dr. Urjit Patel and Shri N. S. Vishwanathan, Shri Ajay Tyagi, Additional Secretary, Ministry of Finance and Shri Deepak Mohanty, Executive Director of the Reserve Bank and Member Secretary of the Sub-Committee. SEBI was represented by Shri Rajeev Kumar Agarwal, Whole Time Member. Executive Directors of the Reserve Bank as well as other officials from the Reserve Bank and the Ministry of Finance also attended the meeting.
The Sub-Committee reviewed the major developments on the global and domestic fronts that impinge on the financial stability of the country. Reports of the FSB Peer Review of India and the Working Group on Development of Corporate Bond Market in India, issues regarding the proposed Bill on setting up of a statutory Financial Data Management Centre (FDMC), Minimum Assured Return Scheme under the National Pension System (NPS) and regulation of spot exchanges were the other topics discussed during the meeting.
The meeting also reviewed the functioning of the State Level Co-ordination Committees (SLCCs) in various States/ Union Territories, the activities of the various Technical Groups of the Sub-Committee and the progress achieved on the decisions/ recommendations emanating from the earlier meetings of the Sub-Committee.

Alpana Killawala
Principal Adviser

Press Release : 2016-2017/528

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Tuesday, 16 February 2016

07:19

IRDAI slaps Rs 20 lakh penalty on Oriental Insurance Co

IRDAI slaps Rs 20 lakh penalty on Oriental Insurance Co

Insurance regulator IRDAI has imposed a penalty of Rs 20 lakh on state-owned Oriental Insurance Company for violation of guidelines including those related to solicitation and group insurance.

There were four charges on the general insurer and the Insurance Regulatory and Development Authority of India (Irdai) has imposed fine of Rs 5 lakh against each of them.
"...as directed under the respective charges, the penalty of Rs 20 lakh shall be debited to the shareholders' account of the general insurer and the amount shall be remitted to the Irdai within a period of 15 days...," the regulator in its order said.

One of the charges was that the insurer instead of using its own portal had entered into an agreement to use the portal of Hero Corporate Services Ltd (HCSL) who is also a corporate agent of another general insurance company.

The regulator also observed from sample Memorandum of Understanding (MoU) copies that no entity/motor dealer with which the insurer has entered into agreement is a licensed entity by the regulator.

While commenting on the charge, the IRDA said, "...it is evident that insurer has violated the Authority guidelines and solicited business from motor dealers without being licensed and payments were made under the head of infrastructure and also entered into an additional relationship with licensed entity of another insurer."

The IRDA gave its final order in the matter of the general insurer based on reply of the Show Cause Notice and submissions made during personal hearing.

Source:Banking Updates
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