New Delhi, Aug. 25: The government today proposed to bring a comprehensive insurance law, including an alternate dispute resolution and appellate authority built along the lines of the Securities Appellate Tribunal and the Telecom Dispute Settlement Appellate Tribunal.
“In the US, almost 90 to 94 per cent of the cases are settled through mediation and conciliation. Arbitration has not proved successful in our country. It will take even more time,” said Justice M. Jagannadha Rao, chairman, Law Commission of India, at a workshop organised by the Federation of Indian Chambers of Commerce and Industry (Ficci) on consultation paper on revision of the Insurance Act, 1938 and the IRDA Act, 1999.
He also proposed the setting up of regional grievance authorities in major cities. “If we only have grievance cells in cities, people could have difficulty in having access to justice,” added Rao.
Reiterating the need to do away with old and archaic laws, Arun Jaitley, minister for law and justice, said, “The insurance act has phrases which are no longer relevant. There is a need to re-look at insurance laws.” The minister was referring to the consultation paper drawn up by the law commission on the need for a comprehensive insurance law by merging the insurance act and the IRDA act.
Jaitley said the need to review insurance laws assumes importance as experiences from the banking and insurance sector indicate that many litigations arise out of the structuring of the older laws.
In another development, the Insurance Regulatory Development Authority (IRDA) has appointed USAID to assist the regulator in strengthening regulation and other aspects of the health insurance sector.
Speaking on the sidelines of the workshop, IRDA chairman C. S. Rao said, “We have appointed a working group under the supervision of IRDA with representations from the health and law ministry, insurers and third party administrators. The group will look into inspection and other regulatory aspects.”
USAID has been assisting the Securities and Exchange Board of India (Sebi) under the financial sector reform expansion programme since 1994. Working at the behest of the ministry of finance, USAID will now assist and advice the regulator in setting international standards in India's under-developed health insurance sector.
Rao said IRDA was also planning to form a committee to resolve rows over brokers' commissions and will come up with regulations soon. Recently, there were strong protests by brokers over IRDA's notification which put into abeyance the norm of routing insurance business through them instead of placing it directly with the insurers who are offering 5 per cent commission to the companies.