Fundamentals of Insurance Unit 3 IRDA

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Fundamentals of Insurance Unit 3 IRDA

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IRDA

FUNDAMENTALS OF INSURANCE

(A) Multiple choice question and answers:

1. The Insurance Regulatory and Development Authority (IRDA) was formed on the recommendation of which committee?

(a) Banarji Committee.

(b) Kutumbe Committee.

(c) Malhotra Committee.

(d) Gupte Committee.

Ans: (c) Malhotra Committee.

2. IRDA Act was passed in which year by the Government of India? 

(a) 1992

(b) 2002

(c) 2000

(d) 1999

Ans: (b) 1999

3. The IRDA was incorporated as a statutory body on ___________?

(a) 30 April 2001

(b) 01 July 2002

(c) 31 December 1999

(d) 19 April 2000

Ans: (d) 19 April 2000.

4. Which section of Insurance Act, 1938 grants power to IRDA to frame regulations?

(a) Section 114A.

(b) Section 111B.

(c) Section 110A.

(d) Section 112B.

Ans: (a) Section 114A.

5. The headquarter of Insurance Regulatory and Development Authority of India (IRDAI) is in which city?

(a) Mumbai.

(b) New Delhi.

(c) Hyderabad.

(d) Kolkata.

Ans: (c) Hyderabad.

6. The board of IRDAI consists of how many members?

(a) 10

(b) 5

(c) 4

(d) 8

Ans: (a) 10.

7. Who is the Chairman of the IRDAI?

(a) Sujay Banarji.

(b) P. J. Joseph.

(c) Praveen Kutumbe.

(d) Subhash C. Khuntia.

Ans: (d) Subhash C. Khuntia.

8. IRDA stands for:

(a) Indian Regulatory Development Authority.

(b) Insurance Regulatory Development Authority.

(c) Investment in Insurance Regulatory Development Authority.

(d) None of These.

Ans: (a) Indian Regulatory Development Authority.

9. Which of the following is the predecessor of the IRDA Act, 1999?

(a) The Insurance Act, 1938

(b) The Life Insurance Corporation Act, 1956

(c) The Marine Insurance Act, 1963

(d) The Public Liability Insurance Act, 1991

Ans: (a) The Insurance Act, 1938.

10. In which year, Insurance Regulatory and Development Authority (IRDA) was constituted?

(a) 1999

(b) 1998

(c) 1997

(d) 1996

Ans: (a) 1999.

1. Give brief account on composition of IRD Authority. 

Ans: The IRD Authority shall consist of the following members-namely:

(i) A chairperson.

(ii) Not more than five whole time members.

(iii) Not more than four part time members.

2. When central government can remove any member from office of the IRDA.

Ans: The Central Government may remove from office any member who

(a) Is or at any time has been adjusted as an insolvent as. 

(b) Has become physically or mentally incapable of acting as a member. or 

(c) Has been convicted of any offence which, in the opinion of the central Government in moral turpitude. or

(d) Has acquired such financial or other interest as likely to affect prejudicially his functions as a member.

3. What are the Aims of IRDA?

Ans: Following are the aims of IRDA:

(i) Maintain the development of the Insurance Sector.

(ii) Prevent wrongdoings and frauds.

(iii) Carry forward the policyholder’s interests.

(iv) Make sure rapid resolution of claims.

(v) Make sure fair conduct in the fiscal market when dealing with the insurance.

4. Mention three sources of the IRDA fund.

Ans: (i) All Government grants fees and charges received by the authority

(ii) All sums received by the authority from such other sources as may be dicted upon by the Central Government.

(iii) The percentage of prescribed premium income received from the insurer.

5. Write a note on Structure of the Insurance Regulatory and Development Authority or IRDA.

Ans: The structure and composition of the Insurance Regulatory and Development Authority or IRDA is specified in the section 4 of the IRDA act, 1999. The Insurance Regulatory and Development Authority is a ten member body that consists of a chairman, five full time and four part time members who have been appointed by the government of India.

6. What is IRDAI?

Ans: IRDAI is an abbreviation that stands for the Insurance Regulatory and Development Authority of India. The insurance business in India is regulated by them and they supervise the functioning of Life Insurance and General Insurance companies that are operating in the country. IRDAI has set various rules and regulations for the operation of the insurance industry. Its sole objective is to defend the interest of the policyholders and ensure the growth and evolution of the insurance industry holistically. IRDAI regularly issues notices to insurance companies in case there are any changes in the rules and regulations. It leads the insurance companies to foster efficiency in the conduct of insurance business and control the rates or any other charges related to insurance.

7. What is the IRDAI Act?

Ans: The IRDAI Act provides a complete regulation of the insurance sector in India (all the insurance business in India is regulated by IRDAI). The IRDAI plays a key role in the development of regulatory mechanism of insurance in the insurance sector. A committee was established by the Government of India to examine the structure of the insurance sector and to advocate revisions to the rules and regulations to make it more effective and efficient. IRDAI was presented in the parliament in 1999. The bill was discussed and debated before it finally became the Insurance Regulatory and Development Authority of India (IRDAI) Act of 1999.

8. What is an Insurance Ombudsman?

Ans: You must approach your insurance company for any query or distress concerning your policy. However, if you feel your issue is not resolved, you can approach the Insurance Ombudsman, which plays the role of grievance redressal forum for policyholders. It is a scheme launched by the Central Government for impartial, efficient, and cost-effective settlement of grievances of a policyholder.

You can employ Insurance Ombudsman in case of:

(i) Claim settlement delay.

(ii) Dispute over insurance premium.

(iii) Total or partial rejection of the claim by the insurance company.

(iv) Conflict over policy terms and conditions.

(v) Disputes over legal aspects of the policy.

(vi) Disputes related to policy services.

(vii) Any breach of rules or regulations of the Insurance Act, 1938.

You can lodge a complaint in writing, duly signed by the complainant or by employing any legal heirs or nominees. You can complain either in person or via email/post/fax along with a hard copy

9. What are the Objective of IRDAI? 

Ans: The primary objective of the IRDAI is to implement the provisions under the Insurance Act.

The mission statement of IRDAI is:

(i) To safeguard the interest of the policyholder and ensure his/her fair treatment.

(ii) To govern the insurance industry impartially and to make sure the financial sanity of the industry remains intact.

(iii) To routinely formulate regulations to ensure the insurance industry functions without any uncertainty.

10. What are the IRDAI Guidelines for Claim Settlement?

Ans: Here are a few IRDAI guidelines for claim settlement that you should be aware of:

(i) As per regulation 27(i), the insurance company or insurer should either settle a claim or reject it within thirty days of receiving all the documents required.

(ii) As per regulation 27(ii), any document not listed under the policy shall not be treated as absolutely necessary unless foul play is suspected. Furthermore, all the additional documents that are asked for must be taken as a one-time call rather than as per time-specific requirements.

(iii) Regulation 27(iv) states that in order to make a claim, the insurer must provide a certain time period within which all the documents need to be submitted. Additionally, if the policyholder fails to provide these documents within the required window and asks for a claim after, then the settlement can be done provided there is a valid cause for the delay,

(iv) As per regulation 27(v), every claim that is settled must be in accordance with the policy’s terms and conditions.

11. What is the Importance of Roles of IRDA?

Ans: Insurance Regulatory and Development Authority is an independent apex legal body, controls and develops the insurance sector in India. In India, insurance dates back to 1850 with the General Insurance Organisation established in Calcutta. Since then, there emerged different players in this market. Each organisation rehearsed business on its own rules and rates. It made customers untrustworthy, which brought into issue the validity of the insurance. With time the management understood this reality and later established an independent administrative body called IRDA. After that, new requests came out, and the market was overflowed with insurance products.

12. What are the types of insurance policies regulated by IRDA?

Ans: The insurance industry is divided into two main categories:

(a) Life insurance: As the name implies, life insurance governs the plans that safeguard your life. It is a contract between an insurance policyholder and an insurance company wherein the insurer agrees to pay a sum of money in exchange for premium payments if the covered person passes away, or after the designated maturity period. Further, life insurance is of two types – term life insurance and whole life insurance.

(b) Non-life insurance (also commonly known as general insurance). Everything else that is not covered under life insurance falls under non-life or general insurance. This includes – health insurance, vehicle insurance, two-wheeler insurance, home insurance, business insurance, travel insurance, etc.

13. Difference Between IRDAI and SEBI on their Functions.

Ans: Difference between IRDAI and SEBI are:

1. Define IRDA? How does IRDA work?

Ans: IRDA or Insurance Regulatory and Development Authority of India is the apex body that supervises and regulates the insurance sector in India. The primary purpose of IRDA is to safeguard the interest of the policyholders and ensure the growth of insurance in the country. When it comes to regulating the insurance industry, IRDA not only looks over life insurance, but also general insurance companies operating within the country.

Consider that to run any professional set-up or otherwise, it is very important to maintain decorum. And so, the one who breaks the rule and disturbs the peace needs to be checked immediately. Similar to this, IRDA works and acts as mentioned below in different situations.

IRDA is an autonomous body with the only mission to regulate fair practices in the insurance market to prevent loss of customers. The industry is now expected to reach US$280 billion by the year 2020. It poses that there is a long way to go and hence there arises a direct need for IRDA actions. To keep up the growth, here is how IRDA works:

(i) To protect the interest of policyholders at the time of claims, issuance of the policy, and cancellation of the policy is the ultimate motive. Hence it monitors that no insurance company can deny the claim on their freewill unless it falls beyond the scope of the cover.

(ii) There is a need to tame the market to a single tune which brings the players together and then compete with each other simply based on the discounts. And so, IRDA clearly states the code of conduct for all insurance companies, surveyors, and loss assessors.

(iii) To prevent any misdeed, it calls for both annual or need-based audit, conduct investigation, call for information from either the insurance companies or intermediaries.

(iv) Regulate the rates and terms offered by the insurance companies to bring equality for the customers.

(v) If there arises any dispute between the insurer and the policyholder, then IRDA will step in to provide a resolution.

(vi) To prevent different insurers quote rates as per their convenience, they bound the major risks to the Tariff Advisory Committee. After this, the insurers keep in mind the percentage of premium income they would need to fund the professional organisations.

(vii) Keeping in mind the development of both the urban and the rural sector, IRDA bounds the insurers with a minimum percentage to carry both life and non-life business.

The scope of work is wide and IRDA as a body works abiding its limit without favoring any single insurance companies.

2. What is the purpose of IRDA? What are the Functions of IRDA?

Ans: Insurance in India dates back to the year 1850 with the first General Insurance company established in Calcutta. Soon, with the passage of years the market became competitive as many insurers started emerging both in life and non-life sectors.

Each company practised business on its rates and rules. It made customers’ insecure which brought the credibility of the insurance market at stake. As early as the government realised this fact, they thought of securing the customer’s interest first and hence established an independent regulatory body called IRDA.

Over time, new demands rolled and the market got flooded with several insurance products. Like a responsible head of the family would act to prevent the family from any damage, IRDA monitors the development of the insurance industry and other related activities.

Below are the important functions of the IRDAI in the insurance industry in India:

(i) Grant, renew, modify, suspend, cancel or withdraw registration certificates of the insurance company.

(ii) Protecting the interests of the policyholder in matters concerning the grant of policies, settlement of claims, nomination by policyholders, insurable interest, surrender value of the policy and other terms and conditions of the policy.

(iii) Specify code of conduct, qualifications and training for intermediary or insurance agents.

(iv) Specify code of conduct for loss assessors and surveyors.

(v) Levying fees and charges for carrying out the provisions of the Act.

(vi) Undertaking inspection, calling for information, and investigations including an audit of insurance companies, intermediaries, and other organisations associated with the insurance business.

(vii) Regulate and control insurance rates, terms and conditions, advantages that may be offered by the insurance providers.

(viii) To safeguard the policyholder’s interest while ensuring a fair and just treatment.

(ix) To have a fair regulation of the insurance industry while ensuring financial soundness of the applicable laws and regulations.

(x) To frame regulations periodically so that there is no ambiguity in the insurance industry.

Apart from the above-mentioned core functions of the IRDA, there are several functions that the regulator performs keeping the policyholder’s interest as its priority.

3. Write a note on Establishment of IRDA. Explain the Duties, Powers and Functions of IRDA according to Section 14 of IRDA Act, 1999.

Ans: The Government of India was the regulator for the insurance industry until 2000. However, to institute a stand-alone apex body, the IRDA was established in 2000 following the recommendation of the Malhotra Committee report in 1999. In August 2000, the IRDA began accepting applications for registrations through invites and allowed companies from other countries to invest up to 26% in the market. The IRDA has outlined several rules and regulations under Section 114A of the Insurance Act, 1938. Regulations range from registration of insurance companies for operating in the country to protecting policyholder’s interests. As of September 2020, there are 31 General Insurance companies and 24 Life Insurance companies who are registered with the IRDA.

Section 14 of IRDA Act, 1999 lays down the duties, powers and functions of IRDA. Without prejudice to the generality of the provisions contained in sub-section (1), the powers and functions of the Authority shall include the following:

(a) To regulate, promote and ensure orderly growth of the insurance business and reinsurance business, subject to the provisions of this Act and any other law for the time being in force.

(b) To cause compliance of the requirement of capital structure of the companies as also solvency margin, insurance business in rural and social sector, submission of their returns/reports, approval and preparation of the scheme of amalgamation and transfer of insurance business.

(c) To issue the applicant a certificate of registration, renewal, modification, withdrawal, suspension or cancellation of such registration.

(d) To protect of the interests of the policy holders in matters concerning assigning of policy, nomination by policy holders, insurable interest, settlement of Insurance claim, surrender value of policy and other terms and conditions of contracts of insurance.

(e) To call for information from, undertaking inspection of, conducting enquiries and investigations including audit of the insurers, intermediaries, insurance intermediaries and other organisations connected with the insurance business.

(f) To specify requisite qualifications, code of conduct and practical training for intermediary or insurance intermediaries and agents.

(g) To control over management of insurers.

(h) To search and seize, protection of interest of policy holders. 

(i) To promote and regulate of professional organisations conducting insurance business.

(j) To regulate investment of funds by insurance companies.

(k) To investigate and inspect the affairs of the insurers.

(l) To adjudicate of disputes between insurers and insurance intermediaries.

(m) To supervise functions of Tariff Advisory Committee and to frame regulations to carry out purposes of the Insurance Act, 1938.

(n) To specify the code of conduct for surveyors and loss assessors.

(o) To promote efficiency in the conduct of insurance business.

(p) To regulate and promote professional organisations connected with the insurance and reinsurance business.

(q) To levy fees and other charges for carrying out the purposes of this Act.

4. Explain the Roles of IRDA in the Indian Insurance Sector. What are the Features & Benefits of IRDA?

Ans: In India, the insurance industry, established in the early 1800s, has developed over the decades with better importance and clearness on safeguarding the policyholders’ interest. Here are the roles of IRDA in the Indian Insurance Sector:

(i) Safeguarding the policyholders’ interest.

(ii) Encourage transparency & fairness of insurance in financial markets.

(iii) Take suitable actions when high standards are maintained, and fiscal stability is observed by the policy providers.

(iv) To makes sure the finest level of self-regulatory is maintained in the insurance business.

(v) Help in advancing the growth of the insurance industry in an organised way for the benefit of the ordinary man.

(vi) Take suitable actions when high standards are not maintained.

(vii) Make sure authentic claims are settled efficiently.

(viii) Deliver long-term funds to boost the Indian economy.

Various Roles of IRDA: As per the IRDA Act, 1999 (Section 14)[1], the authority should make sure the improvement, regulation and encouragement of the insurance business. Some of the vital roles of IRDA are mentioned below:

(i) To provide the candidate with the Insurance Company Registration Certificate, amendments, renewal, cancellation/suspension, withdrawal of such registration.

(ii) To describe the code of conduct applicable to the surveyors and to assessors.

(iii) To promote and control the relationship of professional organisations and the insurance & reinsurance businesses. 

(iv) To call for conducting enquiries, information, investigations, undertaking examination and investigations, comprising the insurer’s audit, intermediaries, insurance mediators and other organisations associated with the insurance business. 

(v) To safeguard the interest of policyholders in the case of nomination and assigning policyholders insurable interests, knowing insurance claims, the cancelling the policy value and other terms and conditions of the insurance contract. 

(vi) Make sure the proficiency and efficiency of the conduct of the insurance business.

(vii) To control or legalise the benefits, rate, terms & conditions offered to the insurer pertaining to general insurance business not controlled & regulated by the Tariff Advisory Committee under Section 64U of the Insurance Act 1938.

(viii) To describe required code of conduct, qualifications and practical training for mediator or insurance mediators and agents.

(ix) To uphold the investment funds by the insurance entities.

(x) To administer the working of the Tariff Advisory Committee.

(xi) To protect the policyholders’ interests in the case of nomination and assigning of policyholders.

(xii) To change, grant or cancel Insurance Company Registration license.

(xiii) To regularly frame laws to remove any range of uncertainty in the insurance sector.

(xiv) To impose the charge to carry out the aim of the Act.

(xv) To identify the way in which the books must be maintained and the way in which the statement of accounts is to be provided by insurers and other insurance entities.

(xvi) Regulation of the upholding of margin solvency.

(xvii) To decide the arguments among the mediators and insurers of insurance mediators.

(xviii) Setting out the percentage of life and general insurance business to be taken forward by the insurer in the social sector or rural sector.

(xix) Setting down of the percentage most adequate income of the insurer of the finance schemes to encourage and control the professional organisations.

(xx) To control the insurance industry in a manner that makes sure fiscal soundness of the applicable laws & regulations.

(xxi) To take action where the suitable standards are insufficient or not enforced efficiently.

(xxii) To perform such other roles of IRDA as maybe (Insurance Regulatory and Development Authority) prescribed.

Following are the salient features of the apex body, the Insurance Regulatory and Development Authority of India:

(i) Acts as a regulator for the insurance industry.

(ii) Protects the policyholder’s interests.

(iii) Rules and regulations are framed by the apex body under Section 114A of the Insurance Act, 1938.

(iv) It is entrusted under the Insurance Act to grant the certificate of registration to new insurance companies to operate in India.

(v) Oversees the insurance industry’s activities to ensure sustained development of insurers and policyholders.

(vi) IRDAI can control and regulate insurance rates, terms and conditions, and advantages that are offered by the insurance providers to the policyholders.

(vii) IRDAI also undertakes inspections and conduct audits of insurance companies, mediator parties and other organisations who are associated with the insurance business to keep an eye out for malpractices and safeguard policyholders against fraud.

(viii) IRDAI can specify the code of conduct, training and qualifications for insurance agents.

5. Define IRDAI? Write about the New Rules and Guidelines for Health and Mediclaim Insurance by IRDAI.

Ans: Insurance Regulatory and Development Authority of India (IRDAI), is a statutory body formed under an Act of Parliament, i.e., Insurance Regulatory and Development Authority Act, 1999 (IRDA Act, 1999) for overall supervision and development of the Insurance sector in India.IRDAI has set various rules and regulations for the operation of the insurance industry. Its sole objective is to defend the interest of the policyholders and ensure the growth and evolution of the insurance industry holistically. IRDAI regularly issues notices to insurance companies in case there are any changes in the rules and regulations. 

The IRDAI is the primary authority in charge of developing new health insurance policies and recommendations. In 2020, the regulator released new IRDAI rules for health and medical insurance, which are as follows:

(i) Claims Rejection: The insurer cannot reject the claim if the policyholder has renewed the policy for eight years without an interruption or lapse. The moratorium period will be in effect throughout this time. Except in fraud cases or when the claim is brought against a policy exclusion, the insurer cannot appeal the claim denial to the IRDAI.

(ii) Inclusion of Telemedicine: The medical service has altered with the advent of digitization, and one can now visit a doctor via online consultations. The Insurance Regulatory and Development Authority of India (IRDAI) has ordered insurers to incorporate telemedicine consultations in their policies.

(iii) Claim Settlement: If an insurer fails to settle a claim within a reasonable time, the insurer is obligated to pay interest on the claim amount.

It should ensure that the claim is settled within 30 to 45 days of the policyholder submitting the final document. IRDAI is a regulatory body that is responsible for everything right and wrong any insurance company does. You can either contact them or let them know about your grievances if the insurance company denies to answer. You can also raise any queries about the insurance policy and insurer in case of a fraud. In either way, the role of IRDAI is very significant for complete transparency and making changes to the rules and regulations from time to time.

6. Discuss the insurance Organization in India.

Ans: Departmental insurances are prevalent in different departments of the central and state government. The postal department of the country has its non systems of insurance under which the employees of post office are insured. Similarity, the postal department as a carrier of goods has also provided insurance for goods to dispatched. These insurances are not compulsory in India. The state Governments of different states have provided life Insurance to their respective employees. Apart from this, the state Government have also provided sickness, maternity, drivability, medial and pension insurance to respective employees.

In India two corporations are established under separate Acts to deal with the insurance business.

(a) The life Insurance corporation of India Act 1956 had provided for life Insurance liquidation for life Insurance business conducted by the life Insurance corporation of India established under the said Act. It stated its functions since sept 1, 1956. It owns all the life insurance business (including annuities) in India.

(b) The general insurance corporation of India established under the General Insurance corporation of India Act 1972 into four distilment com-panies which are–

(i) National Insurance companies Itd.

(ii) New India insurance companies.

(iii) Oriental fire and General Insurance companies Ltd.

(iv) United India fire and General Insurance companies Ltd.

These companies would work separately maintaining their distant features but they are controlled and guided by the general insurance corporation were the companies are also to work freely in the market. They will Suffer and gain there own losses and profits. The monopoly on the concern, may be corporation has gave in this new technique. Now these companies are not the subsidiaries for the GIC.

(c) Employees state insurance corporation: This corporation was established in 1948. This corporation provides social insurance to labors of factories who are getting less than four hundred rupees per month. They are provided a definite assistance in sickness, maternally, disability, medical expenses and assistance to dependents.

(d) Deposit Insurance corporation: This corporation was established in 1962. It provides protection to the depositors of a bank. In case the bank fails, the depositors can get returned their deposits up to rupees ten thousand.

On the other hand, Government companies were established by the Gov-ernment according to the provision of Indian companies Act. In 1957, export risks insurance corporation was established to unsure the export risk. The name of this company was converted to export credit and guar-antee corporation in 1964. Now conducted by the said four government companies.

7. Describe the different power of the life Insurance corporation as provided by the Act.

Ans: Without prejudice to the generality of the provisions contained in sub section (1) but subject to the other provisions contained in this Act the corporation shall have power.

(a) To carry on capital redemption business, annuity, certain business or reinsurance business in so far as such reinsurance business pertains to life insurance business.

(b) Subject to the rules, if any made by the central Government in this behalf, to invest the funds of the corporation in such maker as the corporation may think fit and to take all such steps as may be necessary or expedient for the protection or realisation of any investment.

(c) To acquire hold and dispose of any property for the purpose of its business.

(d) To transfer the whole or any part of the life insurance business carried on outside India to any other person or persons. If in the interest of the corporation it is expedient so to do.

(e) To advance or land money upon the sincerity of any movable or immovable property or otherwise. 

To borrow or raise any money in such manner and upon such security as the corporation may think fit.

(g) To carry on either by itself or through any subsidiary any other business was being carried on by a subsidiary of an insurance whose unrolled business has been transferred to and vested in the corporation under the Act.

(h) To carry on any other business which may seen to the corporation to be capable of being conveniently carried on in connection with its business and calculated directly or directly to render profitable to the business of the apportion.

(i) In the discharge of any of its functions the corporation shall Act so par as may be on business principles.

8. Explain briefly in history of insurance legislation in India.

Ans: The Insurance companies particularly fire and marine insurance company developed very fast during the years from 1914 to 1918 because of the first world war. Duc to the war people wanted to get their life and property insured. With increase in the number of companies, it was essential to control such new companies and provide them with proper guidance. There was a general demand that there should be a full fledged in surname Act. Looking at this general demand the government placed a fill in the year 1924, The fill contained a wide scope for performing insurance business and spreading it throughout the country. The bill came to the legislating assembly after a thorough screening by different bodies.

The Government of India in 1928 passed a stop gap legislation ninth the main deject of collecting statistics regarding insurance business so that the intimation collected would be of value at the time of passing a comprehensive Act. Since the Act of 1928 was not very comprehensive there was a demand for another Act to be made. There was forceful end constant demand of such legislation, which can control Indian as well as non Indian insurance companies. The Government accepted the genuine Demand and appointed the special affair to reform the legislation of 1928. His report was considered by the advisory committee appointed by the Government of India from representatives of all franclies of insurance. The committee made several thongs and the Government of India introduced the bile in the legislature Assembly in 1937 and after much debate and several changes, the bill was finally enacted as the Insurance Act of 1938. This Act followed the principles of minimum interference. It was well balanced and was first comprehensive piece insurance legislation in India governing both life and non-life branches of insurances. This Act provided to prevent the growth of numerous companies, ensured working on sound principles, prevented mis appropriation of funds and protected the assets of the insurance company. As the Act of 1938 was wide and comprehensive there was a strict control over the insurance business. The Act was amended from time to time. According to one such amendment there is provision pertaining to the administration of insurance business. The total right of control is with the central Government.