LAW OF LIFE INSURANCE IN INDIA :
A STUDY OF LEGISLATIVE POLICIES
AND JUDICIAL RESPONSE
(SUMMARY)
SUBMITTED IN PARTIAL FULFILMENT OF THE
REQUIREMENT FOR THE DEGREE OF
DOCTOR OF PHILOSOPHY
IN
LAW
ider the Supervision of Submitted by:
NARESH KUWIAR Reetika
ofessor, Regn. No. 03-rur-390
culty of Law
D. University, Rohtak
DEPARTMENT OF LAW
MAHARSHI DAYANAND UNIVERSITY
ROHTAK
2014
LAW OF LIFE INSURANCE IN INDIA: A STUDY OF
LEGISLATIVE POLICIES AND JUDICIAL RESPONSI
(SUMMARY)
A. INTRODUCTION
Life is beautiful, but uncertain, whatever you do, however smart and hi
you work but you never know what life has in store for you. Life can throv
surprise any moment. Surprises are welcome as long as they are pleasant, but n
surprises take us by hook. A health emergency, an accident or sudden death
some eventualities that you and your family must always be prepared for. Due
this, Life Insurance has become an important subject. It helps you and your fan
to get over any kind of financial problem, if you are not able to take care of th<
In an emerging economy like India, which is characterized by the reduced role
state and declining state supported social security, the importance of life insura
has increased significantly in recent times not only as a risk manager and
saving device but also as a retirement security, annuity provider and profih
investment.
Life insurance is essentially a service industry with policyholder as its f<
point. But, the opening of insurance sector and emergence of powerful busii
corporations in the global market have reduced the power of individual custon
pushing them to accept whatever is being offered by the corporations, leadin;
many scandals, unfair trade practices and moral failures. Not only that, the
insurance contracts, which are generally for a very long period, are designed
drafted by the insurer, so that they have supremacy over the purchase of insun
products and services. As there is no alternative to life insurance services,
consumer is bound to purchase the service and in the process, conflicting natur
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srest develops and lands them in dispute, which many times extend to
gations. The real picture of suffering is known only at the time of claims, as
ny problems of claim settlement are faced by policyholders.
Though, there is a comprehensive law on insurance and IRDA, the supreme
fulator of insurance in India has also framed several rules and regulations to
)tect the interest of insured but, the insurance companies adopt technical means
support of their rights and to escape liability.
Therefore, a reassessment of the working of regulatory framework of life
jurance in the context of changing market structure and economic environment is
juired for effective management and expansion of life insurance business in
dia.
OBJECTIVES OF THE STUDY
The objective of the present research work is to touch all the important
sets of life insurance in a comprehensive way and achieve new insights into it.
le main objectives of the present study are as under: -
1. To trace the growth and development of life insurance in India.
2. To throw light on the concept and scope of life insurance in India.
3. To study various kinds of life insurance products.
4. To analyze advantages of life insurance.
5. To study comprehensively the contract of life insurance i.e. its formation
performance, conditions and discharge.
6. To discuss the concept of insurable interest and its importance in context o
life insurance.
7. To examine the claim settlement procedure and various types of claims.
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8. To analyze the liability of insurer and defenses taken by them to escaj
liability.
9. To evaluate the role of regulatory framework of life insurance and dispu
resolution mechanism.
10. To examine the provisions made for protection of interest of policy holde
and insurers and balancing the competitive interests.
11. To point out the emerging problems and analyze the possibilities <
encouraging self regulation and reducing the role of government in day
day working.
12. To study the grievance redressal mechanism and governance issues in tl
Life Insurance Industry.
13. To highlight the opportunities of expansion of the Life Insurance Indust:
and challenges before the Industry and suggest remedial measures.
14. To understand the concept and scope of CSR vis-a-vis the Life Insuram
Sector in the changing scenario.
15. To analyze the significance of solvency margins in the Life Insuram
Market.
Further, an attempt is also made to find out ways and means to enham
awareness and knowledge about the existing framework of the Life Insurant
Industry in India.
C. RESEARCH METHODOLOGY
The present work is doctrinal in nature. It also provides for a systematic
exposition of the law governing the Indian Life Insurance Industry, analyzes the
impact and authority of this law, explains the areas of difficulty and predict the
future developments.
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CHAPTER SCHEME
The present research work is divided under the following chapters:
1. Chapter I - Introductory describes the need of life insurance in our lives
and why it has become so important in the present day world. It articulates
the problem of study and need to review the laws regulating life insurance in
India in light of the changing scenario. Further, it gives an overview of
literature and describes the methodology employed.
2. Chapter II - Life Insurance: Concept, Nature and Scope deals with the
concept, nature and scope of life insurance and the principle of insurable
interest. Apart from this, the kinds of life insurance, the benefits accruing
from it and the concept of re-insurance and double insurance are also dealt
with in this chapter.
3. Chapter III - Underwriting of Risk and Settlement of Claims deals with
technical aspect of life insurance i.e. calculation and underwriting ol
insurable risk, the claim settlement procedure and difficulties faced b>
policyholders in claim settlement procedure. It also throws light on the new
concept of claim management and customer satisfaction.
4. Chapter IV - Life Insurance in India gives an account of the origin
growth and development of life insurance in India. It also throws light on the
underlying objectives and aftermath of nationalization and liberalization
Further, the establishment of IRDA, entry of private players and the
consequent changes in life insurance market are also overviewed in thi:
chapter.
5. Chapter V - Regulation of Life Insurance Industry is devoted to the
progressive development of law relating to life insurance in India, role o
/
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regulatory framework and position of policyholder under the pres
Insurance Regulatory Regime.
6. Chapter VI - Grievance Redressal Mechanism of Life Insura
Industry examines the Grievance Redressal Mechanism of the I
Insurance Industry and working of its various functionaries in the lighl
changing demands of society and social transformation.
7. Chapter VII - Life Insurance Sector: Management Supervision %
Governance deals with the management, supervision and governance of
insurance sector through ethical business practices, corporate govemar
corporate social responsibility and self governance organizations in
contemporary state of affairs.
8. Chapter VIII - Challenges and Opportunities examines the cun
scenario of life insurance industry, its future prospects, scope of
expansion and challenges that need to be addressed immediately.
9. Chapter IX - Conclusion and Suggestions concludes the whole study :
minutely and precisely goes through almost the whole of the legislal
changes introduced in the Indian life insurance industry and the judii
response to problems faced by this dynamic industry. Based on the sti
some useful and realistic suggestions for healthy development and effecl
regulation of life insurance sector in India have been put forward these an
follows:
1. Reassessment of Role of Life Insurance
2. Simplification of Policy Wordings
3. Focus on Consumer Servicing
4. Enhancing Life Insurance Awareness
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5. Enhancing Underwriting Quality
6. Enacting one Comprehensive Piece of Legislation
7. Establishment of Single Regulator
8. More Tailor Made Products
9. Specialized Distribution Channels
10. Licensing of Life Insurance Agents
11. Setting Up of Policyholders’ Protection Fund
12. Rating of Insurance Companies
13. Credible Reinsurance
14. Adoption of Risk-Based Capital Approach
15. Strict Enforcement of Solvency Margin Regulations
16. Efficient Governance System
17. Strengthen the Role of Self-Regulatory Organizations
18. Efficient Claim Settlement
19. Full-Fledged Grievance Redressal Machinery
20. Provision for Natural Catastrophes
21. Emphasis on Rural Market
22. Expansion of International Market
23. Strengthening Social Security
24. Further Deregulation of Insurance Market
25. Technological Up gradation
26. Promoting Research and Training Activities
27. Raising the FDI Cap
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