IRDAI Current Affairs

Cabinet approves IRDAI’s admission as a signatory to IAIS, MMoU

The Union Cabinet approved Insurance Regulatory and Development Authority’s (IRDAI) admission as a signatory to International Association of Insurance Supervisors (IAIS), Multilateral Memorandum of Understanding (MMoU).

The IAIS is a global framework for cooperation and information exchange between insurance supervisors. The IAIS-MMoU is a statement of its signatories’ intent to cooperate in the field of information exchange as well as procedure for handling information requests.

It provides a formal basis for cooperation and information exchange between the Signatory Authorities regarding the supervision of insurance companies where cross-border aspects arise mainly due to absence of any bilateral agreements.

The scope of the IAIS-MMoU is wider than the existing agreements as it also provides for supervision of other regulated entities such as insurance intermediaries under Anti Money Laundering, (AML) and Combating the Finance of Terrorism (CFT).

Background

With increasing integration of financial market and growing number of internationally active insurance companies there is increased need for mutual cooperation and information exchange between insurance industry supervisors. In this background the IRDAI has become a signatory member of the IAIS-MMoU.

About Insurance Regulatory Authority of India (IRDA)

IRDA is an apex statutory body that regulates and develops the insurance industry in India. It was constituted as per provisions of Insurance Regulatory and Development Authority Act, 1999. Its headquarter is in Hyderabad.

The functions of IRDA are to protect the rights of insurance policy holders; provide registration certification to life insurance companies; renew, modify, cancel or suspend this registration certificate as and when appropriate; promote efficiency in the conduct of insurance business; promote and regulate professional organisations connected with the insurance and reinsurance business; regulate investment of funds by insurance companies; adjudication of disputes between insurers and intermediaries or insurance intermediaries.

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IRDAI allows Banks to tie up with insurers

The Insurance Regulatory and Development Authority of India (IRDAI) has allowed banks to tie up with insurers.

This decision was taken as part of the IRDAI’s new Bancassurance model guidelines which will be notified soon. Prior to this decision, banks were not allowed to  have insurance agency tie-ups with more than one insurer.

As per new decision banks can tie up with nine insurers from three segments viz. life, non–life and standalone health. It will not be binding on banks and they are free to take their call.

Earlier, IRDAI had constituted a 7 member committee to study the reviewing of the existing architecture of the Banacassurance model.

About Bancassurance model

  • Bancassurance is a French term referred as selling of insurance through a bank’s. Thus it can be said that Bancassurance= Banks as Insurance Agents. In this case, selling insurance means distribution of insurance and other financial products of insurance companies through Banks.
  • Under this model banks act as a major distribution channel for insurers which in turn helps them to generate profits from alternative source.
  • This model originated in France and soon spread to other European countries.
  • In case of India a number of insurers have already tied up with banks under bancassurance model and some banks already have flagged off selected insurance products.

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