IRDAI Reg Section 46 : Activities Prohibited from Outsourcing

Explanation using Example

Example 1: Outsourcing Core Underwriting Functions

Introduction: ABC Insurance Company, a leading insurer, is considering outsourcing its core underwriting functions to a third-party service provider to reduce costs and improve efficiency.

Application: According to Section 46, Sub-section (1) of the IRDAI Regulations, 2024, insurers are prohibited from outsourcing certain business activities as specified by the Competent Authority. Core underwriting functions are typically considered critical to an insurer's operations and may be restricted from outsourcing.

Outcome: If ABC Insurance proceeds with outsourcing its underwriting functions without ensuring compliance with the Competent Authority's guidelines, it may face regulatory action. Non-compliance with this provision could result in fines or other legal actions as per the associated penalty clauses of the IRDAI Regulations.

Conclusion: ABC Insurance must carefully review the guidelines issued by the Competent Authority to determine if underwriting functions are prohibited from outsourcing. Compliance ensures the company avoids penalties and maintains its operational integrity.

Example 2: Outsourcing Claims Processing to an Unauthorized Entity

Introduction: XYZ Life Ins...

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