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Financial Sector Assessment Program

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  1. Financial Sector Assessment Program Implementation of Core Principles 25, 27 and 28 29th December 2010 G V Rao -Presentation

  2. What ICP coverage should mean?. • Possession of Authority/Implementation of Principle. Resources/ Capacity- observance. • Public consultation for transparency to make new rules. • Accountability for action needed. • Assessing framework to indentify gaps in consumer protection & market stability. ( To provide industry/consumer perspectives). G V Rao -Presentation

  3. ICP 25—Consumer Protection. 1. “ SA sets minimum requirements - insurers & intermediaries dealing with consumers. 2.“Strengthen consumer confidence in market. 3.Treat consumers fairly—info’-wise. 4.Good claim resolution process for fairness. 5.Access to information/consumer rights/obligations. G V Rao -Presentation

  4. Essential criteria & Evidence. 1. Are insurers/intermediaries dealing with consumers with due skill, care, diligence? 2. Do insurers have policies & systems & provide training to employees on these? 3. Requirements to seek info’ from consumers. Are they outdated? 4. Norms for effective, fair, simple, accessible & equitable claim process, need review? G V Rao -Presentation

  5. One view? • IRDA has legal framework to implement. • IRDA to record procedures & accountability to enable insurers & intermediaries to achieve set requirements. Within? • Consumers to know what these are? • How is that done now by each? • Consumer ignorance of protection-huge? • IRDA- oversee insurers implement goals. G V Rao -Presentation

  6. Claim processing—change proposed? • Claim two aspects—liability & quantum. • Both are decided in one go & a long time. • Determine liability first; arbitration helps. • Empower customer to negotiate claim? • No surveyors fined for breach of COC? • Insurers now dictate on assessment prior to accept liability of claim. • Modify current claim policy condition. G V Rao -Presentation

  7. Suggestion on Licensed Surveyors. • Like in TPA, Agency, have written contracts between insurers & surveyors. • Surveyors should be sued for delays, wrong & faulty discharge of functions & duties. • Surveyors like brokers must have PI for at least Rs 1 crore. So should TPAs—all outsourced outfits. G V Rao -Presentation

  8. ICP 27- Frauds. • SA requires insurers & intermediaries take measures to prevent, detect and remedy insurance fraud. To communicate with other SA to detect. If there are specific legal provisions-fraud? All in insurance chain are likely perpetrators. Fraud results reputational, financial damage and adds to social & economic costs. G V Rao -Presentation

  9. Essential Criteria. • SA has powers & resources combat fraud? • Does legislation cover—definition fraud? • High business integrity standards. • SA requires insurers etc. devote resources. • Counter-fraud training to staff. • Co-operates with other SAs. G V Rao -Presentation

  10. Comments on Fraud. • Fraud—is it defined in Indian law? • Vigilance covers only PSU internal staff. • Private sector to have CVOs? GI Council? • Surveyors & Brokers to have CVOs, as they are organized as Associations. • Insurers to have counter-fraud training? • Deliberate breaches of current safety legislation—is it fraud on insurers? G V Rao -Presentation

  11. AML, combating Terrorism-28. • SA requires, at least life insurers and others offering investment products and intermediaries to detect, prevent& report ML & financing of terrorism—Financial Action Task Force. G V Rao -Presentation

  12. Essential Criteria. • FATF recommendations. • AML/CFT requirements. • AML regulations. • Sensitization of regulatory framework. • Maintenance of data for 5 years. • Insurers to develop procedures, systems & training to detect AML/CFT. G V Rao -Presentation

  13. To be listed by each insurer and other entities—and how these are supervised, audited, and action taken for implementation. Systems, processes & accountability? G V Rao -Presentation

  14. Last slide. • Consumer protection needs fresh look. • Insurer procedures must be self-contained. • Insurers to play bigger role than now. • GI council has to take on accountability. • Surveyors and claim process need relook. • Private players to have Vigilance outfits. • IRDA to develop inspection expertise for ICP implementation—work with others. G V Rao -Presentation