IRDAI vetoes Supreme Court's power to hear appeals against SAT

Cheni, March 7: India's insurance regulator has clearly vetoed the Supreme Court's powers to hear appeals against the decision of Securities Appellate Tribul (SAT) under its Insurance Marketing Firm (IMF) regulations for non-grant of fresh/renewal licence to operate, legal experts say.

According to them, the IMF regulations notified by the Insurance Regulatory and Development Authority of India (IRDAI) recently were not in sync with the provisions of Insurance Act.

The regulator is also venturing into the unchartered territory of fixing the pay levels for sales persons that may give rise to demands from employees of other regulated entities.

As per the IMF regulations, a person whose application - fresh and renewal - for registration/licence is rejected by the insurance regulator can first appeal to the IRDAI chairman and if the ruling is unfavourable, he can approach the SAT.

If the SAT decision is also unfavourable, the applicant can make a fresh application only after one year from the date of fil rejection which IRDAI would consider on its merit, the IMF regulations stipulate.

"This is not in tandem with the provisions of the newly-substituted Section 110 of the Insurance Act 1938 by the Insurance Ordince 2014," D. Varadarajan, Supreme Court advocate and an expert in insurance/company/competition laws, told IANS.

He said under the new provisions, it has been clearly provided that any person aggrieved by an SAT order may, under Section 15Z of the SEBI Act can appeal to the Supreme Court within 60 days on any question of law arising out of that order.

"Therefore, it is not for the IRDAI to truncate this very important statutory appellate mechanism against the order of SAT by way of Regulations, that too against the express provisions of the Insurance Act," Varadarajan said.

As per the regulations, an IMF can represent a maximum of two life insurance companies, two general insurance companies and two health insurance companies at any point of time.

The IMF can also undertake back office activities of insurers, become an approved person of insurance repositories, carry out survey and loss assessment work and any other insurance related activity allowed by IRDAI.

The IMF can also sell mutual funds, pension products, banking services, fincial products of banks, non-insurance products offered by department of posts and any other fincial product or activity permitted by IRDAI. The IMF should have a minimum net worth of Rs.10 lakh and the foreign equity has been capped at 49 percent.. (IANS)