Assignment-2

1273496

Vibha Sharma

Ques. 50 Regulation need to drive transparency and simplification of products and services of insurance sector. Comment?

Introduction:-

               Insurance means contract between insured and insurer  in which insured receives the financial protection or reimbursement of losses by the insurance company.

Insurance regulatory law is the body of statutory law, rules and regulations that governs the whole insurance industry. It includes rules regarding the different types of policies and insurance claims. It can be broken in 3 categories:-

• Regulation of the business of insurance
• Regulation of content of insurance policies (consumer policies)
• Regulation of claim handling

Insurance Regulatory and Development Authority (IRDA) is a statutory body which regulates and develops the insurance industry in India through the act passed in parliament in 1999.

Main purpose of insurance regulations is to protect the public’s interest. It also includes:-

• Licensing and regulating insurance companies
• Monitoring and preserving the financial solvency of insurance companies
• Regulating and standardizing insurance policies and products
• Controlling market conduct and preventing unfair trade practices

              

Discussion:-

         Insurance regulation in Jordan, According to Dimitri Vittas Jordanian market is free from extensive state regulations regarding premium, investment and reinsurance controls. Due to this positive feature many private companies entered into the insurance industry. Presence of  large number of private companies in the industry which didn’t help in development of the insurance industry. It reflects the underdevelopment of insurance industry which directed towards the enactment of modern ways i.e. new insurance law and creation of new insurance commission. This would help in setting licensing and financial solvency criteria, while reducing the role of political favoritism.

              According to Tom baker and Peter Siegelman persistently high profits in “insurance” because insurance schemes are sold with add-on to other products or services (such as loss damage waiver sold with car rental and credit life insurance sold with a loan) which become the challenge for the standard analysis of insurance. Both would suggest that firstly buyer should not buy insurance of small value losses and second would be seller should not charge prices which greatly exceed the cost of providing insurance. There should be proper statutory body to regulate the working of insurer as well as the insured person.

Conclusion:-

        According to me there should be proper regulatory body which continuously  keep on the eye on working of insurance companies which makes the product or service understandable by both parties and to protect the interest of insured person as well handling of claims.