The Insurance Regulatory and Development Authority (IRDA), the insurance regulator will shortly come out with regulations for amalgamation of life insurance companies, issue of capital by non-life insurers and also draft guidelines on design of life policies.
According to IRDA's annual report for the year 2011-12, issued Friday, the regulator is working on laying down the regulations for amalgamation and transfer of life insurance companies.
"The regulations propose to lay down the procedural framework for the same. The regulatory framework for amalgamation and transfer of life insurance companies would be broadly on the same lines as in the case of non-life insurance companies already notified by the Authority," the report states.
The regulations propose a three-stage process whereby IRDA will first give its 'in-principle' approval to the companies. The applicant companies shall ensure compliance with various regulatory provisions as may be applicable to them.
Following that, IRDA will grant its final approval to the proposed scheme of amalgamation upon confirmation that all regulatory compliances are in place.
According to IRDA, the regulation for issue of capital by non-life insurers is being proposed, and is similar to the one notified for the life insurers in 2011.
In order to simplify life insurance products that meets the best interests of policyholders, IRDA will shortly finalise the guidelines on design of life insurance policies.
The salient features of these guidelines include provisions relating to minimum death benefit, policy structure, administration of additional benefits, index-linked products, minimum premium paying term policies, benefit disclosures, guaranteed surrender value, reinsurance and others.
The insurance regulator is also working on laying down the broad framework for prevention, detection, classification, mitigation and reporting of insurance frauds.
"The framework would also encourage the insurance councils of life and non-life companies to build up databases to serve as reference points for the industry to share statistics and experience on frauds," the report said.
Insurers should ensure that there is in place an efficient mechanism to weed out fraudulent attempts so that claims ratios are maintained within healthier limits.
On the issue of fulfilling the promise made by life insurers, IRDA has said that the claim settlement ratio of government owned Life Insurance Corporation (LIC) is better than that of the private life insurers.
LIC's claims settlement ratio during 2011-12 went up to 97.42 percent from 97.03 percent the previous year. On the other hand the claims settlement ratio for private insurers stood at 89.34 percent during 2011-12 up from 86.04 percent the previous fiscal.
--With IANS Inputs--
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