Introduction: The Insurance Regulatory and Development Authority of India (IRDAI) has recently issued a crucial notification on 22nd January, 2024, de-notifying the Arbitration clause in various tariff products. This significant move impacts Fire, Motor, Engineering, Workmen’s Compensation, and other classes of insurance businesses.
Detailed Analysis:
1. Background on Tariffs Withdrawal (2006): In 2006, following the withdrawal of tariffs by the Tariff Advisory Committee, IRDAI exercised its powers under the IRDA Act, 1999. Through a notification on 4th December 2006 (Ref.034/IRDA/De-Tariff/Dec-06), it specified that certain regulations for classes like Fire, Engineering, Motor, Workmen’s Compensation, etc., would continue until further orders.
2. Power of IRDAI under Section 64 ULA (2023): The recent notification, dated 22nd January, 2024, signifies IRDAI’s authority under Section 64 ULA of the Insurance Act, 1938. The Arbitration clause-related provisions in tariff general regulations, terms, conditions, clauses, warranties, policy, add-ons, endorsement wordings, and proposal forms applicable to risks under the erstwhile Tariffs are de-notified, effective from 27th October, 2023.
3. Impact on Insurance Contracts (Post October 27, 2023): From the mentioned date onward, insurance risk contracts are subject to circulars issued by the Authority regarding Arbitration clauses. These circulars may be amended as deemed necessary over time.
Conclusion: In conclusion, the recent notification from IRDAI marks a pivotal shift in the regulatory landscape for insurance tariffs. The de-notification of the Arbitration clause in various insurance products indicates a move towards adapting to evolving industry dynamics. Insurance stakeholders must stay abreast of circulars issued by IRDAI to ensure compliance and alignment with the revised regulatory framework.
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INSURANCE REGULATORY AND DEVELOPMENT AUTHORITY OF INDIA
NOTIFICATION
Hyderabad, 22nd January, 2024
F. No. IRDAI/Gen Insurance/Tariff/1/195/2024.—In exercise of the powers conferred by sub section (1) of section 64 ULA of the Insurance Act, 1938, the Authority hereby de-notifies the Arbitration clause in all tariff products under Fire, Motor and Engineering, Workmen’s Compensation and other classes of insurance business.
1. In the year 2006, pursuant to the withdrawal of tariffs by the Tariff Advisory Committee, the Insurance Regulatory and Development Authority of India (“Authority”) in exercise of powers vested in it under clause (i) of sub section (2) of Section 14 of the IRDA Act, 1999, issued notification Ref.034/IRDA/De-Tariff/Dec-06 dated 4th December, 2006, wherein it was notified that the tariff general regulations (other than those relating to rating), terms, conditions, clauses, warranties, policy and endorsement wordings applicable to certain classes of business such as Fire, Engineering, Motor, Workmens Compensation and other classes of insurances which were then under tariffs shall continue to be followed until further orders.
2. Now, by virtue of powers vested with the Authority under sub section (1) of Section 64 ULA of the Insurance Act,1938 the Authority hereby notifies that the Arbitration clause related provisions in the tariff general regulations, terms, conditions, clauses, warranties, policy, add-ons, endorsement wordings and proposal form applicable to the risks of insurance business governed by the erstwhile Tariffs stand de-notified with effect from 27th October, 2023.
3. Accordingly, it is hereby notified that with effect from 27th October, 2023, insurance risks contracts mentioned provision regarding Arbitration clause shall be subject to the circular issued in this regard by the Authority and amended from time to time.
DEBASISH PANDA, Chairperson
[ADVT.-III/4/Exty./707/2023-24]
