Page 28 - India Insurance Report 2023- BIMTECH

16 India Insurance Report - Series II

1. The concept of Mutuality was devised where all the persons desirous of covering the risks come
together and initially contribute pre-agreed figure out of which the claims are met and administrative
expenses incurred. In the event this is found insufficient, supplementary contributions are collected
from the various participants. In this concept, the profit element is singularly absent, and the
participating groups are able to seek reinsurance at a cheaper rate and that too after going through
their own retention and such like-minded societies group together, retaining a substantial portion.
This concept has been successfully implemented for Marine Liability Cover where the sum insured is
not mentioned in the Certificate, and the participant’s liability, be it contractual or legal, is a limit of
Insurance. More than 90% of the world tonnage is covered under such Associations collectively
known as the International Group of P&I Associations. In India, if one has to think in terms of at least
coastal shipping to be served locally, the concept of Mutuality needs to be recognized under the
Mutuality Act. If this is done, the Indian Ship-owners can then form an association to run the Mutual
Insurance Organization to protect the contractual and legal liability of the participating Members;

2. The Insurance Act in India does not recognize the mutual concept of Insurance, which is in vogue
globally. The mutual and cooperative sector is one sector that can change the face of the deprived
and destitute in India by putting people before profit and seamlessly protecting the lives and livelihoods
of millions who are otherwise not reached by commercial insurers. In the paradigm of developmental
work, the ‘pooling’ and ‘community’ deliver the best results.

3. The IRDA Act, 1999

Keeping in view the above principles enshrined in point 1, certain thoughts are discussed here:

a. Insurance Advisory Committee (Section 25 of the IRDA Act, 1999)

Section 25 (1) – The Authority may, by Notification, establish, with effect from such date as it
may specify in such notification, a Committee to be known as the Insurance Advisory Committee.

Section 25 (2) – The Insurance Advisory Committee shall consist of not more than twenty-five
members, excluding ex officio members to represent the interests of commerce, industry,
transport, agriculture, consumer fora, surveyors, agents, intermediaries, organisations engaged
in safety and loss prevention, research bodies and employees’ association in the insurance sector.

Section 25 (3) – The Chairperson and the members of the Authority shall be the ex officio
Chairperson and ex officio members of the Insurance Advisory Committee.

Section 25 (4) – The object of the Insurance Advisory Committee shall be to advise the authority
on matters relating to the making of the regulations under Section 26.

Section 25 (5) – Without prejudice to the provisions of Sub Section (4), the Insurance Advisory
Committee may advise the Authority on such other matters as may be prescribed.”

For a high performing culture, best practices and inspirational leadership, the direction should
come from a revamped Insurance Advisory Committee having the best of Indian and Global
financial/insurance/reinsurance leadership, along with sectoral experts such as Healthcare,
Agriculture, Technology, Marketing, and Corporate Governance etc. The Section 25 (2) should
be amended as under: