NEW DELHI, MAY 19: The government is contemplating to expand the scope of the proposed Insurance Regulatory Authority (IRA) by empowering it with regulatory and control re-insurance business.

Amendments are likely to be made in clause 13(3) of the IRA Bill for regulating inward and outward flow of re-insurance business. Clause 13(3) of the IRA Bill, which is yet to be passed by parliament, deals with duties, powers and functions of the authority.

The re-insurance business, currently, is being looked after by General Insurance Corporation (GIC) for its four subsidiaries.

According to finance ministry sources, in the event of opening of the general insurance business, companies will have their own re-insurance strategies, and hence it will be necessary to control them.

The suggestion was mooted by former General Insurance Corporation chairman RK Daruwala, and was accepted by the finance ministry and the standing committee on finance.

The other changes, which have been in-principal agreed by finance ministry, relate to the adjudication of the disputes between insurers and intermediaries.

It had been argued that the relationship between insurance companies and intermediaries was a matter of contract, and the authority should not be burdened with adjudication of disputes.

Therefore, it was pointed out that the sub-clause(1) empowering the authority to adjudicate such disputes be deleted.

The authority will also be regulating pension funds, though not specifically mentioned in the IRA Bill.

It was suggested by experts that Insurance Regulatory Authority should be specifically empowered to regulate private insurance funds set up by insurance companies till a separate body was created for the purpose.

The finance ministry, however, found it unnecessary and pointed out that the under the Insurance Act, 1938, life insurance includes pension business.

The government also proposes to make certain other amendments in the IRA Bill, pertaining to the powers of the chairman of the authority.

The finance ministry has accepted the suggestion of former Reserve Bank of India governor RN Malhotra that the IRA chairman should have powers of general superintendence and direction of the board affairs.

The finance ministry, however, did not agree to the Daruwala’s suggestion that the chairman of the authority should preferably be an actuary.

This, according to finance ministry, would result in a loss of flexibility. The IRA to receive data from companies and formalise its report. Under the Companies Act, six months time is provided to the companies to finalise their annual accounts.