Case BriefsHigh Courts

Madras High Court: S. Vaidyanathan, J., cancelled the bumper-to-bumper policy which was made mandatory by this Court’s order for new vehicles for a period of 5 years.

Upon hearing the submissions made on behalf of Insurance Regulatory and Development Authority (IRDAI), General Insurance Council (GIC) representing the licensed General Insurance Companies and SIAM, as a non-profit entity that has been espousing the cause of the Automobile Industry for several years, it appeared that the order dated 04-08-2021, mandating the coverage of bumper to bumper policy may not be logistically and economically feasible for effective implementation in the present legal dispensation.

Further, it was submitted that the directions issued by the Court have an unintended impact causing severe repercussions on the society and therefore the said directions may be withdrawn.

It was also brought to the notice of this Court that the issue of long-term third-party insurance coverage had been mandated by the Supreme Court and the Regulating Body, viz., Insurance Regulatory and Development Authority (IRDAI) had been periodically monitoring over the changing scenario and hence, there was no need for issuance of such compulsory directions.

Analysis, Law and Decision

Considering the submissions of the parties, High Court stated that directions issued by this Court in its 4-8-2021 order may not be conducive and suitable for implementation in the current situation, hence the said direction is withdrawn.

Lastly, the Bench concluded saying that, it hopes and trusts that law makers will look into this aspect and examine the need for a suitable amendment in the Act, relating to the wide coverage of vehicles so as to protect the innocent victims.

Further, in view of the withdrawal of the direction regarding bumper-to-bumper policy, the Circular dated 31-08-2021 issued by the Joint Transport Commissioner, Chennai also stands cancelled.

High Court directed Registry to remove Paragraph No.13 from the earlier order of this Court dated 04-08-2021 and issue a fresh copy of the order to the parties. [New India Assurance Co. Ltd. v. K. Parvathi, CMA No. 1565 of 2020, decided on 13-09-2021]

Legislation UpdatesNotifications

The Insurance Regulatory and Development Authority of India has released product structure for cyber insurance vide circular dated September 8, 2021. The guidance aims to provide the following:

 

  • Enabling insurers to evaluate new technologies posing heightened cyber risk, identify protection gaps in the existing products.
  • Facilitating insurers in developing stand-alone cyber insurance products for combating cyber risks.
  • Providing a set of recommendations on maximum possible coverages that could be included in the cyber insurance products.
  • Encouraging insurers to adopt best practices and provide additional covers in response to customer needs.
  • Improving the development of the cyber insurance market with new products and enhance benefits for policyholders.

 

General insurers may review the product structure based on the coverage advocated in the guidance, who have already developed some cyber insurance products with exclusive coverage for individuals to protect against cyber threats and at present offering the products that focuses on commercial business.


*Tanvi Singh, Editorial Assistant has reported this brief.

Legislation UpdatesNotifications

The Insurance Regulatory and Development Authority of India has published revised guidelines on Trade Credit insurance on 8th September 2021. The guidelines shall come into force from November 1, 2021.

 

Key highlights of the revised guidelines are:

  • The guidelines set out the regulatory framework to:
    1. promote sustainable and healthy development of trade credit insurance business
    2. facilitate general insurance companies to offer trade credit insurance covers to suppliers as well as licensed banks and other financial institutions to help businesses manage country risk, open up access to new markets
    3. to manage non-payment risk associated with trade financing portfolio.
  • These guidelines shall be applicable to all insurers transacting general insurance business, registered under the Insurance Act, 1938. The ECGC Ltd (formerly Export Credit Guarantee Corporation of India Ltd) is exempted from the application of these guidelines.
  • A trade credit insurance for Banks / Financial Institutions and Factoring Companies shall cover the loss on account of non-receipt of payment from a buyer, due to commercial or political risks, against the bills / invoices purchased or discounted and it shall be issued for covering trade related transactions other than loan default of seller.
  • A trade credit insurance policy shall not cover a) Reverse Factoring; b) Government Buyers except for political risks in overseas under export transaction. c) Financial Guarantee in any form d) Any other risk cover that may be specified by the Authority from time to time.
  • A trade credit insurance policy shall cover only receivables arising from transactions made under trade credit transaction.
  • Every Insurer shall have an Underwriting and Risk Management Policy approved by Board, in addition to the underwriting policy prescribed under Guidelines on Product Filing Procedures for General Insurance Products which shall be filed with the Authority.
  • The insurer shall have a “Claims Manual” which will illustrate how the claims shall be processed, documentation, delegation of authority, policy holders servicing, grievance redressal etc.
  • Contravention of the any of these Guidelines shall invite penal action under the provisions of the Insurance Act, 1938 which includes prohibiting insurer against entering into any new or particular trade credit insurance business transaction after giving the insurer an opportunity of being heard.


*Tanvi Singh, Editorial Assistant has reported this brief.

Hot Off The PressNews

The Competition Commission of India (CCI) approves the acquisition of stake by Axis Bank Limited, Axis Capital Limited and Axis Securities Limited in Max Life Insurance Company Limited.

Axis Bank Limited provides services in retail banking, which includes retail lending and retail deposits, wholesale banking, payment solutions, wealth management, forex and remittance products, distribution of mutual fund schemes and distribution of insurance policies.

Axis Capital Limited is engaged in the business of providing focused and customized solutions in the areas of investment banking and institutional equities.

Axis Securities Limited is engaged in the business of broking, distribution of financial products and advisory services.

Max Life Insurance Company Limited is Life Insurance company registered with Insurance Regulatory and Development Authority of India (IRDAI). It is engaged in the business of providing life insurance and annuity products and investment plans in India.

The proposed combination approved by CCI relates to increase of shareholding in Max Life Insurance Company Limited (Target) to approximately 9.9% by Axis Bank Limited and acquisition of 2% and 1% shareholding in the Target by Axis Capital Limited and Axis Securities Limited respectively.

Detailed order of the CCI will follow.


Ministry of Corporate Affairs

[Press Release dt. 21-01-2021]

[Source: PIB]

Hot Off The PressNews

Pollution Under Control Certificate at the time of renewal of motor insurance mandatory

Insurance Regulatory and Development Authority of India has advised all General Insurance Companies to comply with the directions issued by the Supreme Court of India in W.P. (Civil) 13029 of 1985, M.C. Mehta v. Union of India.

Central Pollution Control Board (CPCB) has raised concerns regarding the status of compliance of the above directions of the Supreme Court of India in the National Capital Region of Delhi (Delhi-NCR).

IRDAI asks General Insurance Companies to ensure that the above directions of the Supreme Court of India are scrupulously followed with a special focus on compliance in the National Capital Region of Delhi (Delhi–NCR).

Read the circular here: PUC Circular 20-08-2020


Insurance Regulatory and Development Authority of India

[Circular dt. 20-08-2020]

COVID 19Hot Off The PressNews

The National Human Rights Commission has taken suo moto cognizance of a media report stating that the healthcare workers, who are at the maximum risk to contract the corona virus infections are facing refusals/demands for high premiums to buy group Mediclaim policies.

Reportedly, as Covid-19 cases continue to rise and the government offers little clarity on insurance cover for private healthcare professionals doing non-Covid work, and there is a scramble to find the right policy.

It is further stated that while most doctors have a medical cover, the struggle has mainly been about ensuring protection for their staffers. Moreover, as mentioned in the news report there is also confusion whether the Rs 50 lakh health cover provided by the Central government for healthcare workers included private doctors, staffers and also those doing non-Covid work.

Accordingly, The Commission has issued notices to the the Chairman, Insurance Regulatory and Development Authority and the Secretary, Department of Financial Services, Insurance Division, Union Ministry of Finance calling for a detailed report in the matter within 4 weeks, positively.

Issuing the notices, the Commission has observed that in this period of pandemic, what the country needs most is proper health facilities and infrastructure. Denial of insurance claims by the companies to the Covid Warriors will definitely bring down their morale and its result will adversely affect the general public at the end. Considering the issue as a case of violation of human rights , the Commission thought its intervention necessary in the matter as the sufferers will be poor citizens who are already under trauma of the Corona virus due to lack of medical facilities.

According to the media report, Dr Sudhir Naik, in charge of the medico-legal cell of the Association of Medical Consultants (AMC) has reportedly said that no insurance company wanted to cover the Covid-warriors. He has stated that the authorities have been forcing us to keep our clinics open, but the staffers are apprehensive about working. The medical fraternity is reportedly pinning its hopes on the standard Covid-19 policy which the Insurance Regulatory and Development Authority of India (IRDAI) has asked all the insurance providers to design by June 15.

Reportedly, several nursing home owners in the city have been scouting for a group cover, but with little success. The companies have refused to extend even the fixed benefit covers. Here the beneficiary is paid a lumpsum on testing positive. The sum assured can vary from Rs 20,000 to Rs 2 lakh, and annual premium is relatively low.

As per news report, the Indian Medical Association (IMA) has said that a company which earlier agreed to extend a fixed benefit cover of up to Rs 2 lakh to its members, pulled out of the deal after Covid-19 cases began to rise in the state. The IMA has reportedly stated that the company has returned the premium paid by around 150 doctors who had already signed the documents.


NHRC

Press Release dt. 12-06-2020