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The Indian company willing to start the operation of Insurance activities shall need to obtain the certificate of registration from the IRDAI. The company has to file Form IRDAI/R2 with the authority who will, after examining the applicant’s application and the other information, issue the certificate of registration in Form IRDAI/R3. In addition to registering the company as an Indian Insurance Company, the insurer must comply with certain compliance requirements under the IRDAI (Registration of Indian Insurance Companies) Regulations 2022. However, the said registration certificate can come under the authority’s scrutiny. The authority may suspend or cancel the insurance company’s certificate of registration if it does not meet the required requirements. The suspension or cancellation will lead the company to cease any new insurance business. The present article will enumerate such procedure for suspension or cancellation of the registration certificate and the reason attached therewith.
Under the new regulation of IRDAI on the registration of Indian an insurance companies, the authority can suspend or cancel the IRDAI/R3 certificate (Certificate of Registration) provided to the insurer. The suspension or cancellation of the registration certificate can be for a class or class of Insurance business for a required period as specified under the order. The suspension or cancellation of the registration certificate may be due to the following reasons:
Penalty for repeated offences: The authority may impose a penalty on the applicant if it is found that there are repeated defaults.
The authority, before the suspension of the registration certificate, shall have to consider the following steps:
The authority may order for the cancellation of the registration certificate after holding an enquiry in accordance with the following procedure:
The effect of the suspension or cancellation of the registration certificate is that from the date of suspension or cancellation of the registration certificate, the insurer shall cease to undertake any new transaction for the insurance business. However, the authority can allow the insurer to continue serving the existing policyholders.
The order passed by the authority shall be published in at least 2 daily newspapers in the area where the insurer has its principal place of business.
The insurer aggrieved by order of the authority may appeal before the SAT[1] or Securities Appellate Tribunal under Section 110 of the Insurance act 1938.
The insurer may voluntarily surrender the registration certificate and may request the authority to cancel the same after examining the request in the following cases:
The IRDAI holds the authority of suspension or cancellation of the registration certificate of the insurer. The authority may scrutinise the actions of the insurer if it is found that they are in default by suspending or cancelling the registration certificate. This scrutinisation enables the insurer to conduct its business in an informed manner and to serve the interest of the policyholders. Even though the authority holds the power of suspension or cancellation of the registration certificate, the insurer can voluntarily ask for the cancellation of the registration certificate. Henceforth, the insurer shall conduct its business in accordance with the conditions for which the approval is granted.
Read Our Article: IRDAI Guidelines for establishment and closure of Liaison Office
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