1 / 4

Workshop On Financial Sector Assessment Programme Suresh Mathur Hyderabad 29 th December, 2010

Workshop On Financial Sector Assessment Programme Suresh Mathur Hyderabad 29 th December, 2010. Insurance core principle 16 – Winding up and exit from the market vis-à-vis Indian Insurance Act and Companies Act, 1956. Financial Sector Assessment Program – 29 December 2010.

garrison
Download Presentation

Workshop On Financial Sector Assessment Programme Suresh Mathur Hyderabad 29 th December, 2010

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Workshop On Financial Sector Assessment Programme Suresh Mathur Hyderabad 29th December, 2010

  2. Insurance core principle 16 – Winding up and exit from the market vis-à-vis Indian Insurance Act and Companies Act, 1956 Financial Sector Assessment Program – 29 December 2010

  3. Provisions as per the IAIS principle 16 (insolvency & winding up) • Define insolvency, establish criteria and procedure for dealing insolvency • Legal framework for protection of policyholders & other stakeholders • Facilitating takeover or merger of troubled insurer with a healthier insurer • Policyholders protection fund may be created to protect policyholders’ interests • Essential criteria: • Determination of the point at which insurer must stop doing insurance business • Procedure for dealing with insolvency and winding up to be clearly laid down in law • High level priority to policyholders’ benefits and minimising disruption, if any, in providing for benefits to policyholders

  4. Framework under Companies Act, 1956 & Insurance Act, 1938 • Section 425 of Companies Act, 1956 provides for 3 modes of winding up – voluntary, by or under supervision of the Court • Section 53(2) of the Insurance Act, 1938 provides for additional grounds for winding up of insurance companies by Court – one of the grounds is that where the insurer is or is deemed to be insolvent (Section 53(2)(b)(iii)) • Prescription of procedures upon winding up: • Valuation of assets and liabilities of the insurer (section 55) • Application of surplus assets of life insurance fund in liquidation or insolvency (section 56) • Return of deposits kept with RBI made under section 7 (section 59) • Notice to policyholder of their policy values upon merger (section 60) • Section 52H of Insurance Act provides powers to Central Government to acquire any insurer, if the affairs of the company are detrimental to interests of policyholders or may order merger with another insurance company and approve the scheme of merger - this facilitates merger of troubled insurers with healthier insurers • Section 37A of Insurance Act provides for amalgamation of insurance companies by IRDA in the interests of policyholders • Provision of minimum solvency margin of Rs.500 million (Section 64VA(1A)) – a higher solvency margin of Rs.750 million is however insisted by IRDA

More Related