Public Disclosure Norm and IRDAI
4th Apr, 2019
The Insurance Regulatory and Development Authority of India (IRDAI) moots public disclosure norm.
What is Public Disclosure Norm?
- A public disclosure norm requires all general insurers, health insurers, specialised insurers and reinsurers, including branches of foreign reinsurers, to share information at specified intervals about their financials and performance.
- The norms require the insurers to share information about revenue, profit and loss account and balance sheet, as well as provide segmental reporting and schedules to accounts.
What is the objective of norm?
- It is to ensure the safety of the policyholders.
- It recognises the fact that insurers have an equal responsibility towards the policyholders as their duty towards investors.
- This is so because when insurers become insolvent, loss to policyholders is much more than that to investors.
Why the norm is introduced?
- Public disclosures on the risks faced by the insurers provide information to the policyholders to make informed decisions before entering into an insurance contract.
- Besides safety of policyholders, other objectives behind the proposed disclosure norm are to serve as a tool to assess risk exposure of an insurer.
- It educates investors on company’s financial performance, financial position, risk exposure, corporate governance and management.
- It measures orderly growth of the insurance sector and is critical for ensuring its fairness.
- Though they may not be listed on any stock exchange, such public disclosures become necessary even for all the insurance companies. The exposure draft makes it mandatory for the insurers, other than those into life insurance, to upload on their website the details on a quarterly basis and publish in newspapers the details on a half yearly basis.
Insurance Regulatory and Development Authority of India (IRDAI)
- It is an autonomous, statutory body tasked with regulating and promoting the insurance and re-insurance industries in India.
- It was constituted by the Insurance Regulatory and Development Authority Act, 1999, an Act of Parliament passed by the Government of India.
- IRDAI is a 10-member body including the chairman, five full-time and four part-time members appointed by the government of India.
- It was created based on the recommendations of the Malhotra Committee.
- Its headquarters is in Hyderabad.
What are the functions of IRDAI?
The functions of the IRDAI are defined in Section 14 of the IRDAI Act, 1999 and include:
- Issuing, renewing, modifying, withdrawing, suspending or cancelling registrations
- Protecting policyholder interests
- Specifying qualifications, the code of conduct and training for intermediaries and agents
- Specifying the code of conduct for surveyors and loss assessors
- Promoting efficiency in the conduct of insurance businesses
- Promoting and regulating professional organisations connected with the insurance and re-insurance industry
- Levying fees and other charges
- Inspecting and investigating insurers, intermediaries and other relevant organisations.