Loss adjusters, or "surveyors" as they are known in the Indian market, are the subject of the latest Circular issued by the Indian insurance industry regulator, the Insurance Regulatory & Development Authority (IRDA).
Shortly after the Indian insurance market was opened to competition the IRDA issued its "Insurance Surveyors and Loss Assessors (Licensing, Professional Requirement and Code of Conduct) Regulation 2000". These regulations were out of line with other IRDA regulations published for Insurers, brokers, etc., in that the Surveyors Regulations did not expressly refer to a foreign investment cap or specifically list when a surveyor's license could be cancelled.
In March 2013 the IRDA issued its "Insurance Surveyors and Loss Assessors (Licensing, Professional Requirements and Code of Conduct) Amendment Regulations 2013. The Amendment Regulations covered licensing, duties and responsibilities, the suspension and cancellation of licences, and the further registration of corporate surveyors. In relation to the latter, the Amendment Regulations provided that:
- A corporate surveyor can only be a company incorporated under the Companies Act 1956, a firm formed under the Partnership Act 1932, or a limited liability partnership incorporated under the LLP Act 2008.
- The name of the corporate surveyor must include the words "Insurance Surveyor and Loss Assessors."
- There must be at least 2 directors/partners, and no director/partner can work in the same capacity with more than one corporate surveyor.
- Any licensed surveyor appointed as director/partner must only accept work and issue reports in his capacity as a director/partner of the corporate surveyor.
In a Circular dated 10 October 2013 but released by the IRDA on 29 October, the IRDA reiterated the Amendment Regulations and referred to 8 particular provisions as requiring "immediate attention and necessary action from all existing and new corporate" surveyors. These provisions include the following:
- The requirement for there to be at least 2 directors/partners, and for them to only accept work and issue reports in their capacity as a director/partner of the corporate surveyor, suggestive perhaps of work being accepted and reports being issued independently of the corporate structure.
- A restriction of foreign ownership to 26%, in line with the rest of the insurance industry. The fact that this particular requirement is the only one to appear in a bold font suggest that the IRDA has come to learn of contraventions of this rule, a perception reinforced by a reference to the manner in which that 26% holding is to be calculated - the calculation must be in line with the rules that apply to Indian Insurers. In addition to appearing in bold font, the font size has also been increased by the IRDA.
- All corporate surveyors agree to submit a declaration to the IRDA of material changes (including the resignation, death or suspension of a director/partner, and a change in shareholding) within 15 days "for grant of modified license. The license issued by the Authority (in original) shall be surrendered at the time of application for grant of modified license."
It is always difficult to say what prompts this type of Circular, but Circulars such as these are unusual rather than unheard of, so the fact that the IRDA has issued this Circular suggest that they have come by information that has displeased them, and they are prepared to act.
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