Page 26 - Insurance Times July 2016

fected. This measure reduces the expenses of the insurer,
thereby lowering the premiums to be paid by the policy-
holder. Further, IRDA has also addressed the issue of Refer-
rals with the IRDA (Sharing of database for distribution of
insurance products) Regulations, 2010 that leaves no scope
for misuse of the system.
7) Initiative of IRDA on prospect product
matrix by insurers, based on needs
analysis:
Implementation of a Prospect Product Matrix by insurers,
based on Needs Analysis is another initiative the IRDA is
making as a step in curbing wrong advice and misselling.
Further, guidelines relating to distance marketing have been
issued by IRDA. The guidelines address the challenges re-
lating to misspelling using distance marketing mode, which
is fallout of the advancement in technology. While the ben-
efits of having new and faster channels need to be reaped,
the loopholes created by them need plugging and this is
precisely what the guidelines are aimed at.
8) Financial literacy and consumer edu-
cation initiatives by IRDAI:
1. The financial literacy and consumer education initiatives
are aimed at ensuring that the customer is well in-
formed and financially educated while purchasing insur-
ance products. During 2011-12, IRDA has carried out
awareness campaigns in English, Hindi and vernacular
languages through print and electronic media. Apart
from media campaigns through newspapers, radio and
television etc; essay competition under the Bima
Bemisaal banner for students was conducted during the
year 2011-12 and IRDA's exclusive Consumer Education
Website was launched.
2. The Authority conducted its 3rd seminar on 'Policy-
holder Protection and Welfare' on 3rd June, 2012 at
Kolkata. During the seminar, the Authority released its
Consumer Affairs Annual Booklet 2011-12 containing
updates on Policyholder Protection measures; analysis
of complaints statistics and details about Comic Series
(Volume-2) on Insurance Ombudsman, ULIP, Motor and
Health. The policyholders' handbooks on Life, Motor,
Health, Intermediaries, Property and Travel Insurance
in various Indian languages (other than Hindi) were also believed that companies could design products, which could
released where IRDA continues to support consumer
bodies in its efforts to spread word about insurance as
well as about the rights and duties of a policyholder.
26 The Insurance Times, July 2016
9) New regulations related to mainte-
nance of solvency margins of all the In-
dian insurers:
Every insurer is required to maintain a Required Solvency
Margin as per Section 64VA of the Insurance Act, 1938.
Every insurer shall maintain an excess of the value of assets
over the amount of liabilities of not less than an amount
prescribed by the IRDA, which is referred to as a Required
Solvency Margin.
The IRDA (Assets, Liabilities and Solvency Margin of Insur-
ers) Regulations, 2000 describe in detail the method of com-
putation of the Required Solvency Margin. Subsequently vide
Circular No. 056/IRDA/ACIL/Solvency Margin February-07
dated 23/02/2007 to all the Life Insurers Regarding Report-
ing of Maintenance of Solvency Ratio - on Quarterly Basis
and the Time Table for submission these quarterly reports -
it has been decided that all Life Insurers which are regis-
tered with IRDA need to move towards this Quarterly Re-
porting. Time Table for the submission of these quarterly
reports directed by IRDA is as follows:
Solvency Report as on To be submitted on or before
June 30th August 15th
September 30th November 15th
December 31st February 15th
March 31st May 15th
9.1. Life Insurers
9.1.1. In the case of life insurers, the Required Solvency
Margin is the higher of an amount of fifty crores of rupees
(one hundred crores of rupees in the case of reinsurer) or a
sum which is based on a formula given in the Act and the
regulations framed there under. One of the important fac-
tors that influence insurance penetration is the capital re-
quirement under the solvency margin.
The pure term products provide simple life cover and it is
reach various segments of the population in meeting their
insurance needs, thereby enhancing insurance penetration.
In line with this objective, the Authority had decided to al-
low the life insurers to reduce the capital requirement in
the case of pure term products without changing the fac-
tor loadings in the case of the remaining products. Suitable
instructions modifying these requirements were issued by