CONSULTATION PAPER OF THE LAW COMMISSION OF INDIA ON REVISION OF THE INSURANCE ACT 1938
PRESS RELEASE 16th June 03
The Law Commission today released a Consultation Paper on the Revision of the Insurance Act, 1938. The previous exercise to amend the Insurance Act, 1938 was undertaken in 1999 at the time of enactment of the Insurance Regulatory Development Authority Act, 1999 (IRDA Act).
The Commission has undertaken the present exercise in the context of the changed policy that has permitted private insurance companies both in the life and non-life sectors. A need has been felt to strengthen the regulatory mechanism even while restructuring the existing legislation with a view to removing portions that have become redundant as a consequence of the recent changes.
Among the major areas of changes suggested in the Consultation Paper are:
- merging of the provisions of the IRDA Act with the Insurance Act to avoid multiplicity of legislations;
- deletion of redundant and transitory provisions in the Insurance Act, 1938;
- Amendments reflect the changed policy of permitting private insurance companies and strengthening the regulatory mechanism;
- Providing for stringent norms regarding maintenance of ‘solvency margin’ and investments by both public sector and private sector insurance companies;
- Providing for a full-fledged grievance redressal mechanism that includes
- The constitution of Grievance Redressal Authorities (GRAs) comprising one judicial and two technical members to deal with complaints/claims of policyholders against insurers (the GRAs are expected to replace the present system of insurer appointed Ombudsman)
- Appointment of adjudicating officers by the IRDA to determine and levy penalties on defaulting insurers, insurance intermediaries and insurance agents
- Providing for an appeal against the decisions of the IRDA, GRAs and adjudicating officers to an Insurance Appellate Tribunal (IAT) comprising a judge (sitting or retired) of the Supreme Court/Chief Justice of a High Court as presiding officer and two other members having sufficient experience in insurance matters
- Providing for a statutory appeal to the Supreme Court against the decisions of the IAT
The Law Commission proposes to have further intensive consultation with a wide range of interested parties including consumer groups, insurers and insurance agents. The full text of the Consultation Paper is available at the website of the Law Commission at http://lawcommissionofindia.nic.in and responses from interested persons can be sent directly to the Law Commission either by post or e-mail at firstname.lastname@example.org on or before July 10, 2003.