IRDA Current Affairs - 2019
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As per Insurance Regulatory and Development Authority (IRDA) Chairman T. S. Vijayan, the insurance industry will undergo another round of regulatory reforms, particularly focused on distribution channel, to instill growth.
As per him, IRDA is focusing on bank channels and sub-broker level distribution and citizen service centres (CSCs) for better growth prospects. The insurance penetration is expected to rise substantially in the years to come. The insurance industry was going to witness major changes in the coming days. Several insurance firms would be listed on stock exchanges and open up abundant opportunities in the segment.
IRDA is concerned about the product design and miss-selling aims to make sure that products approved by IRDA should have least chances of miss-selling.
What is Misselling?
Misselling is an intentional and ethically questionable practice of selling of products or services in circumstances where the contract is either misrepresented, or the product/service is unsuitable for the customer’s needs. For example, selling life insurance to someone with no dependents is regarded as misselling. In this case, the investor would arguably have little need for whole life insurance and, therefore, an insurance salesperson describing the product as something the investor urgently needed to protect his or her assets in the event of death could be considered a case of misselling.
Insurance Regulatory and Development Authority (IRDA) has relaxed the investment norms for the firms like Housing finance and infrastructure finance companies to allow these companies to get higher funding from the insurance companies.
Steps taken by IRDA:
- The investments in debt instruments issued by housing finance companies as specified in the investment regulations shall not be included under the exposure to financial and insurance activities. Currently, such exposure to housing finance companies and infrastructure finance companies is treated as exposure under financial and insurance activities but the industry exposure limits will continue to apply for such investments.
- The single investee debt exposure limits in housing finance companies have been enhanced to 20% of equity plus free reserves from existing 10% limit. The limit mentioned above can be further increased by an additional 5% with the prior approval of board of company.
- The group and promoter group exposure norms will continue to apply on the investments made in a housing finance company.