The Insurance Regulatory and Development Authority of India (IRDAI) has powers under the Insurance Act 1938 (Insurance Act) to inspect and investigate Insurers and insurance intermediaries. Under §33 of the Insurance Act 1938, Insurers and insurance intermediaries are required to provide the IRDAI with access to books of account, registers and other documents in their custody or power as well as to furnish any statements and information sought. Typically, certain details are sought in advance of the on-site inspection of an Insurer/insurance intermediary. With regard to the submission of pre-inspection data requirements, the Authority noted that in certain cases there was delay in providing the data sought.
To address these concerns, the IRDAI issued: (a) the Exposure Draft on IRDAI (Minimum Information for Inspection or Investigation) Regulations 2018, and subsequently (b) the Exposure Draft on the IRDAI (Minimum Information for Inspection or Investigation) Regulations 2019, and invited comments from various stakeholders.
Following the comments received, on 24 November 2020, the IRDAI issued the IRDAI (Minimum Information Required for Investigation and Inspection) Regulations 2020 (Regulations). The Regulations stipulate the 'minimum information' and records required to be maintained by: (a) Insurers, (b) intermediaries and insurance intermediaries, and the general norms applicable to both.
A summary of the key requirements stipulated under the Regulations is set out below:
Minimum Information Requirements -Insurers
- A record of all proposals for insurance received, cover-notes, individual policies and group policies, reinsurance business, premiums received, endorsements, bank guarantees and deposits with cross-reference to the relevant policy or policies, and claims intimated.
- A record of insurance agents, insurance intermediaries, all salaried field workers, employees including employees on contract basis and the underlying employment letters and changes therein.
- Cash book and disbursement book with supporting documents, investments separately for immovable property, securities and scripts, loans on mortgages and other loans, and other assets.
- Proper records of attendance, in any form, of staff indicating employees who attend the office each day.
- Office of an Insurer issuing any documents used for evidencing of the assumption of risk is required to: (a) ensure that such documents are serially numbered, (b) maintain a record of the serial numbers of the forms of documents issued to each person, and (c) maintain a proper check to verify that all the forms and documents issued are properly accounted for.
Minimum Information Requirements - Intermediaries and Insurance Intermediaries
- A record of all employees specifying, inter alia, the name and address, employee identification number, and name of the branch or office where posted.
- A record of policies solicited with respect to new and renewal business.
- A record of claims, if serviced and processed /surveyed through the insurance intermediary or third party administrator, as applicable.
- A record of grievances and complaints with details, such as policy number, name of the Insurer, name of the complainant, date of receipt of grievance, category of grievance, brief description of grievance and details on the resolution process.
Insurers, intermediaries and insurance intermediaries are required to put in place an appropriate policy which must be approved by their Boards of Directors on maintenance of records and destruction of old records, both in physical and electronic form, in accordance with the provisions of the Regulations.
In addition to the requirements applicable to Insurers and intermediaries and insurance intermediaries, the Regulations also stipulate common requirements of information, data, documents and records applicable to all:
- The IRDAI has clarified that the Insurer, intermediary and insurance intermediary is expected to maintain all relevant information, documentation, and related papers with respect to its specific function, at its principal place of business or branch office, or offices.
- The information, data and documents maintained is required to be reconciled with the audited financials, wherever relevant, and requirements of other applicable law and regulations.
- The requisite information, data and documents per the Regulations may be maintained either in physical form or electronic form, and shall be made accessible to the persons authorized by the IRDAI.
The Regulations come into force six months after their publication in the Official Gazette of the Government of India, ie, in May 2021. Going forward, with the notification of the Regulations and express guidance being issued on the minimum information/records required to be in place at all times, Insurers and insurance intermediaries will be required to be able to provide prompt and ready access to these details, when sought.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.