Siva Sivani Institute of Management Assignment of

UNDERWRITNG Submitted To:Prof. B S RAO Submitted by:-

TEAM 16
Submitted By: HEMANT KUMAR KABRA SHIVA KUMAR SNEHA KACHAWA Roll No B4-17 B4-45 B4-46

On
Sub title VI
Corporate Social Responsibility RTI Act Guidelines as applicable to Insurance Business Rural and Social Sector Obligations Regulations of IRDA.

The Corporate Social Responsibility: A Review of Literature

Introduction Business organisations strive to survive by the efficient use of the factors of production and other facilities of the society. This process puts organizations in an interdependent relation with the government, the community at large and the environment. Such interdependence gives rise to a series of broader responsibilities to society. Social responsibilities are both internal and external to the organisations. Presently, there is an increasing concern with the social responsibilities of organisations. This is reflected in part by the extent of government action and legislation on such matters as, for instance, employment protection, equal opportunities, companys acts, consumer law, product liability and safeguarding the environment based on this the social responsibilities of organisations have turned into a legal requirement. Business Stakeholders Business organisations should act in a socially responsible manner for two self-evident reasons: one philosophic and the other pragmatic. Philosophically, models of a responsible society require organisations to do their part along with the family and other social institutions (the schools, the religious institutions, etc.). Pragmatically, organisations have to take account of the societys values, otherwise they will be isolated and therefore their long-term survival will be jeopardised. Against this backdrop, business organisations have to think of their overall stakeholders, which include: 1. Customers: The most immediate, influential and targeted stakeholder for any organisation is the customer or the consumer of its goods or services. There is an obvious controversy as to whether the customer is right in the goods and services they choose to buy from a company. It is true that sometimes customers do not recognise the long-term harmful effects of their choices such as in the case of tobacco, milk products for babies and expensive stereo equipment in the cars when safety equipment are relegated to optional extras. However, it is equally true that there is no ethical basis to judge whether provision of such goods and services is right or wrong. Customer is the king is no more than a myth. The modern organisation exercises power to the extent of shaping tastes of consumers to its products. But this power is often buried down to leave nobler causes to surface. The responsibilities to consumers may be seen as no more than a natural outcome of good business. However, there are broader social responsibilities including: a) providing good value for money; b) the safety and durability of products/services; c) standard of after-sale service; d) Long-term satisfaction serviceability, adequate supply of products/services, and spare parts and replacement parts. e) Fair standards of advertising and trading; and f) Full and unambiguous information to potential consumers.

2. Employees: social responsibilities of the firms towards their employees extend beyond the terms and conditions of the contract to include: justice in treatment; democratic functioning of the organisation; training in new skills and technologies; effective personnel and employment relations policies and practices; and provision of social and leisure facilitates. Today, in increasing competitive markets, customers take into consideration the ethics of the employment practices exercised by a firm when evaluating alternative products. 3. Local Communities: firms often try to be seen as friendly to their neighbourhood. Although this might be considered a genuine concern or just an attempt to buy favour. In both cases, one might argue, the organisations will adopt a proactive tendency to community rather than to wait for long and be reactive. 4. Governments: Governments depend on the private businesses to get a sizable portion of revues through taxation. In addition, governments also depend on the business organisations to take greater roles in society and to achieve several economic and social objectives such as the regional economic development, training and limitations on the sales of tobacco, for instance. 5. Intermediaries: Possible social responsibilities include: fair standards of trading; honouring terms and conditions of purchase or sale; and settlement dates (i.e. payment of accounts). 6. Suppliers: Taking account of the needs of suppliers is certainly a combination of shrewd business sense and good ethical. 7. The Financial Community: A major group within this framework is the shareholders, who expect a fair financial return as payment for risk bearing and the use of their capital. Shareholders also have the right to participate in policy decisions and to question top management on the affairs of the company .Management of the firms should present full information to the shareholders. In the final analyses, shareholders have to be reassured that the organisation is going to achieve its stated objectives. The Societal Marketing Concept As the business organisation considers the above broader range of stakeholders, it becomes necessary to think of the social welfare in the context of the external costs and benefits of the actions conducted by that firm. In this framework, one has to consider the positive and negative externalities of a firms operations. There is a diversity of opinion on the issue of corporate social responsibility in general. On the one hand, there is the agency theory devised by Milton Friedman, which argues that the social responsibility of an organisation is to generate as much as possible profit for its shareholders within the rules of the game in terms of fair competition, no fraud, etc. It should be clearly understood that the managers of a firm are no more than agents working on behalf of the owners. This theory has been further refined by Sternberg to include two additional tests of the common decency (e.g. refraining from stealing, cheating, etc) and distributive justice (i. e. ensuring that rewards are proportional to contributions made). Therefore, an organisation is said to be ethical if it meets the three tests of: 1) long-term wealth growth of its owners; 2) common decency; and 3) distributive justice. If it fails in any of these three tests, the organisation is deemed unethical.

But at the other end of the spectrum, there is the stakeholder theory, which emphasises a much broader set of social responsibilities for business . Ecological Responsibility Ecology and the increasing destruction of ecosystems and natural resources have warranted a widespread concern from the public, the governments and inter-governmental agencies. Moreover, business organisations throughout the world are legally required to conduct an Environmental Impact Assessment (EIA) for their new operations or expansion of the existing ones. EIA is a careful and detailed study of the likely environmental consequences of the new development, together with plans to avoid causing damage or to repair damage that cannot be. The EIA takes into account whether resources used are renewable or nonrenewable. In this sense, the rights of the future generations to exploit such resources have to be considered. But, , there are dangers in having too many regulations to curb the environmental impacts of the business. The cost of obeying regulations may inhibit innovation and, apart from the economic effect, this may delay or even prevent the substitution of new products and processes for old ones. Business Ethics The scope of business ethics is very broad, because any action by a firm or one of its employees can be done ethically or unethically, thus the behaviours of a business towards its customers, suppliers, competitors, employees, the environment, local communities and other stakeholders will certainly reflect the organisational cultures in terms of ethics adopted or neglected. A valid argument can be raised as to whether businesses should pursue ethics for their own sake or as a means to future growth and long-term survival. In this sense, some researchers consider ethics as a duty, irrespective of the consequences; whereas others opt for a consequentialist view that goodness or badness of an action is only evident in the consequences of that action. Corporate Governance The recent corporate scandals in the USA have caused public outcry that business organisations should adopt certain codes of conducts to avoid shareholders disappointment. Enron and WorldCom, the two giant American companies, have collapsed after a series of deliberate misleading financial accounts. In the framework of the British combined code of corporate governance, a firm has to comply or explain: That is, to abide by the code provisions or to justify its aberration.

CORPORATE SOCIAL RESPONSIBILITY Corporate Social Responsibility (CSR) is becoming an increasingly important activity for Businesses nationally and internationally. As globalization accelerates and large

Corporations serve as global providers; these corporations have progressively recognized the Benefits of providing CSR programs in their various locations. CSR activities are now being undertaken throughout the globe. The term is often used interchangeably for other terms such as Corporate Citizenship and is also linked to the concept of Triple Bottom Line Reporting (TBL), which is used as a Framework for measuring an organizations performance against economic, social and Environmental parameters. The rationale for CSR has been articulated in a number of ways. In essence it is about Building sustainable businesses, which need healthy economies, markets and communities. The key drivers for CSR are Enlightened self-interest - creating a synergy of ethics, a cohesive society and a Sustainable global economy where markets, labour and communities are able to Function well together.
Social investment - contributing towards physical infrastructure and social capital are Increasing seen as a necessary part of doing business. Transparency and trust - business has low ratings of trust in public perception. There is increasing expectation that companies will be more open, more accountable And be prepared to report publicly on their performance in social and environmental Arenas. Increased public expectations of business - globally companies are expected to Do more than merely provide jobs and contribute to the economy through taxes and Employment.

Asia Pacific Perspective Corporate social responsibility is represented by the contributions undertaken by companies to society through its core business activities, its social investment and philanthropy Programmes and its engagement in public policy. In recent years CSR has become a Fundamental business practice and has gained much attention from chief executives, Chairmen, boards of directors and executive management teams of larger international Companies. They understand that a strong CSR program is an essential element in Achieving good business practices and effective leadership. Companies have determined that their impact on the economic, social and environmental landscape directly affects their Relationships with stakeholders, in particular investors, employees, customers, business Partners, governments and communities. The Asia Pacific context is distinct. On the one hand, there are long-standing traditions of Respect for family and social networks, and high value placed on relationships, social stability and education. Diverse religions and cultures also bring distinct attitudes towards community, Social behaviour and engagement as well as support and philanthropic contributions. Governments in the region also play distinct roles often stronger in terms of influence on Economic and social priorities, yet not as advanced in terms of social safety nets. This has resulted in the drivers for corporate citizenship being very different from those in other regions. Many of the large corporations in Asia Pacific are private, and many do not have the same Public pressures on corporate behaviour that public companies in Europe and North America have for progress on corporate social responsibility, although this is

changing. Yet many of the larger companies in Asia Pacific have strong localized philanthropic programmes. Also, Regional companies that are engaged in supply chains of major global corporations and local Affiliates of global corporations from Europe and America have significant pressures and a Strong business case to develop corporate citizenship policies and practices within the Region, not least on the environment, human rights and labour standards. Corporate Social Responsibility: Unlocking the value According to the results of a global survey in 2002, 94 per cent of Companies believe the development of a Corporate Social Responsibility (CSR) strategy can Deliver real business benefits, however only 11 per cent have made significant progress for Implementing the strategy in their organization. Senior executives from 147 companies in a range of industry sectors across Europe, North America and Australasia were interviewed for the survey. The survey concluded that CEOs are failing to recognize the benefits of implementing Corporate Social Responsibility strategies, despite increased pressure to include ethical, Social and environmental issues into their decision-making processes. Research found that company CSR programs influence 70 per cent of all consumers Purchasing decisions, with many investors and employees are also being swayed in their choice of companies."While companies recognize the value of an integrated CSR strategy, the majority are failing to maximize the associated business opportunities. Corporate Social Responsibility is now a Determining factor in consumer and client choice which companies cannot afford to ignore. Companies who fail to maximize their adoption of a CSR strategy will be left behind."

World Economic Forum & CSR The World Economic Forum has recognized the importance of corporate social responsibility by establishing the Global Corporate Citizenship Initiative. The Initiative hopes to increase Businesses' engagement in and support for corporate social responsibility as a business Strategy with long-term benefits both for the companies themselves as well as society in General. A fine line between corporate governance and corporate social responsibility Companies worldwide are increasingly worried about the impact of their business activities on society. In an interview, Erik Belfrage, Senior Vice President, SEB Bank (Sweden) explains how good corporate governance programmes can benefit all. Companies worldwide are increasingly worried about the impact of their business activities on society. Many have created so-called corporate social responsibility (CSR) programmes that aim to balance their operations with the concerns of external stakeholders such as customers, unions, local communities, NGOs and governments. Social and environmental consequences are weighed against economic gains. But whilst many agree that CSR is the right thing for companies to do, proponents often grow uncomfortable when explaining the business case for doing good. The costs

associated with these programmes are clear but the correlation with better financial performance is hard to prove. In any case, they argue, the objectives of CSR go beyond short-term economic gains. Erik Belfrage* of Swedens SEB Bank believes that this debate misses a fundamental point: doing well is not separate from being good. Corporate governance and corporate social responsibility are both extremely important to a company. But it is not a natural thing to separate them. If you have a well formed corporate governance programme in place that would probably take care of most CSR issues he explains. Enhanced brand value is the pay-off for getting this right, Mr Belfrage says. Good corporate governance is basically about making better decisions for the long term health of the company. I think it is risk management, where the risk is the value of your brand. The company is also likely to benefit from fewer disruptions to its business from strikes, boycotts and regulation, he adds. But he concedes that this involves a long-term payback: You must look at it over five years, at least. Erasing the distinction between corporate governance and corporate social responsibility also reveals the true difficulty of developing a well-rooted programme. Charitable giving or a well-managed publicity campaign might seem a quick fix but they will not yield longterm rewards. This requires some soul searching. A company must do a lot of homework when deciding its values. We did that at SEB and it took us nearly three years. But now everyone in the bank can say Yes, I share those values. We are living them. Mr Belfrage stresses that this process begins with an active internal conversation: This requires involving everyone. There must be a lot of back and forth between the board, executives and staff. Where it is a pet project of one executive, it doesn't work. Similarly, when there is no real response from employees, its not anchored. This in turn helps the company communicate with its external stakeholders. If openness becomes a natural part of business life, then communicating becomes more natural, he says. Once a company is confident in its dialogue with the public, it will also find that building its brand value is easier and faster. Mr Belfrage explains: You only have a split second to get the attention of a large group of people. It is a matter of efficiency.

The Business benefits of corporate social responsibility Corporate social responsibility (CSR) isn't just about doing the right thing. It means behaving responsibly, and also dealing with suppliers who do the same. It also offers direct

business benefits. See the page in this guide on how to benefit from corporate social responsibility. Building a reputation as a responsible business sets you apart. Companies often favour suppliers who demonstrate responsible policies, as this can have a positive impact on how they are perceived by customers. Some customers don't just prefer to deal with responsible companies, but insist on it. The Co-operative Group, for instance, place a strong emphasis on its corporate social responsibility and publishes detailed 'warts and all' reports on its performance on a wide range of criteria - from animal welfare to salt levels in its pizzas. Reducing resource use, waste and emissions doesn't just help the environment - it saves you money too. It's not difficult to cut utility bills and waste disposal costs and you can bring immediate cash benefits. For more information read our guides on how to save money by reducing waste and use your resources more efficiently . There are other benefits too:

A good reputation makes it easier to recruit employees. Employees may stay longer, reducing the costs and disruption of recruitment and Employees are better motivated and more productive. CSR helps ensure you comply with regulatory requirements. Activities such as involvement with the local community are ideal opportunities to Good relationships with local authorities make doing business easier. Understanding the wider impact of your business can help you develop new CSR can make you more competitive and reduces the risk of sudden damage to your

retraining.

generate positive press coverage.

products and services.

reputation (and sales). Investors recognise this and are more willing to finance you.

Measuring the effectiveness of Corporate Social Responsibility

Corporate social responsibility (CSR) can help you cut costs and boost sales. However, there are other significant benefits which businesses sometime forget about, as they are slightly harder to measure. Benefits such as improved reputation, stronger customer loyalty and motivated employees should not be overlooked, and can in fact be measured. For example, improved motivation could lead to reduced absenteeism and reduced staff turnover. Similarly, customer loyalty could increase levels of repeat purchasing.

Benefit from corporate social responsibility

Make the most of your corporate social responsibility (CSR) activities by publicizing them. Ensure that customers, suppliers and the local community know what you are doing. CSR lends itself to good news stories.

Publicity like this can be a key part of using CSR to win contracts. People want to buy from businesses they respect. CSR can be particularly effective for targeting ethical companies, the public sector and not-for-profit organisations.

At the same time, you should see CSR as part of a continuing process of building long-term value. Everything you do should help improve your reputation and encourage customers and other stakeholders to stay involved with you. A business that buys recycled paper - but exploits its customers and ignores the community has missed the point.

You could consider working towards a management standard which you can then use to publicize your ethical, environmental or social responsibility. For example, many businesses shave already achieved the environmental management standard ISO 14001.

A new voluntary standard is being introduced later in 2010 to help businesses manage their corporate social responsibility.

Effective CSR like this helps you continue to differentiate yourself. Even with dozens of competitors, a real commitment to CSR lets you stand out. As well as affecting the way you behave, CSR can lead to new products and services that

reflect your values and those of your stakeholders. Over time, it can all add up to a powerful brand - and a winning business. CONTEMPORARY SOCIAL ISSUES Corporations deal with a wide variety of social issues and problems, some directly related to their operations, some not. It would not be possible to adequately describe all of the social issues faced by business. Here we will briefly discuss three contemporary issues that are of major concern: the environment, global issues, and technology issues. There are many others. ENVIRONMENTAL ISSUES Corporations have long been criticized for their negative effect on the natural environment in terms of wasting natural resources and contributing to environmental problems such as pollution and global warming. The use of fossil fuels is thought to contribute to global warming, and there is both governmental and societal pressure on corporations to adhere to stricter environmental standards and to voluntarily change production processes in order to do less harm to the environment. Other issues related to the natural environment include waste disposal, deforestation, acid rain, and land degradation. It is likely that corporate responsibilities in this area will increase in the coming years. GLOBAL ISSUES Corporations increasingly operate in a global environment. The globalization of business appears to be an irreversible trend, but there are many opponents to it. Critics suggest that globalization leads to the exploitation of developing nations and workers, destruction of the environment, and increased human rights abuses. They also argue that globalization primarily benefits the wealthy and widens the gap between the rich and the poor. Proponents of globalization argue that open markets lead to increased standards of living for everyone, higher wages for workers worldwide, and economic development in impoverished nations. Many large corporations are multinational in scope and will continue to face legal, social, and ethical issues brought on by the increasing globalization of business. Whether one is an opponent or proponent of globalization, however, does not change the fact that corporations operating globally face daunting social issues. Perhaps the most pressing issue is that of labour standards in different countries around the world. Many corporations have been stung by revelations that their plants around the world were

"sweatshops" and/or employed very young children. This problem is complex because societal standards and expectations regarding working conditions and the employment of children vary significantly around the world. Corporations must decide which the responsible option is: adopting the standards of the countries in which they are operating or imposing a common standard world-wide. A related issue is that of safety conditions in plants around the world. Another issue in global business is the issue of marketing goods and services in the international marketplace. Some U.S. companies, for example, have marketed products in other countries after the products were banned in the United States. TECHNOLOGY ISSUES Another contemporary social issue relates to technology and its effect on society. For example, the Internet has opened up many new avenues for marketing goods and services, but has also opened up the possibility of abuse by corporations. Issues of privacy and the security of confidential information must be addressed. Biotechnology companies face questions related to the use of embryonic stem cells, genetic engineering, and cloning. All of these issues have far-reaching societal and ethical implications. As our technological capabilities continue to advance, it is likely that the responsibilities of corporations in this area will increase dramatically. Corporate social responsibility is a complex topic. There is no question that the legal, ethical, and discretionary expectations placed on businesses are greater than ever before. Few companies totally disregard social issues and problems. Most purport to pursue not only the goal of increased revenues and profits, but also the goal of community and societal betterment. Research suggests that those corporations that develop a reputation as being socially responsive and ethical enjoy higher levels of performance. However, the ultimate motivation for corporations to practice social responsibility should not be a financial motivation, but a moral and ethical one.

Arguments For and Against CSR

FOR The rise of the modern corporation created and continues to create many social Problems. Therefore, the corporate world should assume responsibility for addressing These problems. In the long run, it is in corporations' best Interest to assume social Responsibilities. It will increase the chances that they will have a future and reduce the chances of increased governmental regulation. Large corporations have huge reserves of Human and financial capital. They should devote at least some of their Resources to addressing social issues.

AGAINST Taking on social and moral issues is not economically feasible. Corporations should focus on earning a profit for their shareholders and leave social issues to others.

Assuming social responsibilities places those corporations doing so at a competitive disadvantage relative to those who do not.

Those who are most capable should address social issues. Those in the corporate world are not equipped to deal with social problems.

RTI Act Guidelines as applicable to Insurance Business

The Government of India has enacted the Right to Information Act, 2005 (http://www.persmin.nic.in) which has come into effect from October 13, 2005. The Right to Information under this Act is meant to give to the citizens of India access to information under control of public authorities to promote transparency and accountability in these organizations. The Act, under Sections 8 and 9, provides for certain categories of information to be exempt from disclosure. The Act also provides for appointment of a Chief Public Information Officer to deal with requests for information. Ref: IRDA/GEN/08/2007 IRDA Circular no 08/2007/13.06.11 The right to information is implicitly guaranteed by the Constitution. However, with a view to set out a practical regime for securing information, the Indian Parliament enacted the Right to Information Act, 2005 and thus gave a powerful tool to the citizens to get information from the Government as a matter of right. This law is very comprehensive and covers almost all matters of governance and has the widest possible reach, being applicable to Government at all levels- Union, State and local as well as recipients of government grants. http://rti.gov.in/RTICorner/Guideonrti.pdf /2008 Democracy requires an informed citizenry and transparency of information which are vital to its functioning and also to contain corruption and to hold Governments and their instrumentalities accountable to the governed Haryana Labour Journal June-Dec. 2007 http://hrylabour.gov.in/RTIAct.pdf

Definition of Right to Information

Right to information accessible under the Right to Information Act 2005 which is held by or under the control of any public authority and includes the right to (i) Inspection of work, documents, records; (ii) Taking notes, extracts or certified copies of documents or records; (iii) Taking certified samples of material; (iv) Obtaining information in the form of diskettes, floppies, tapes, video cassettes or in any other electronic mode or through printouts where such information is stored in a computer or in any other device. www.cgg.gov.in/images/RTIAct2005CGGManual.doc

What is Right to Information?

http://www.rtiindia.org

Every citizen has a right to know how the Government is functioning. Right to Information empowers every citizen to seek any information from the Government, inspect any Government documents and seek certified photocopies thereof. Some laws on Right to Information also empower citizens to official inspect any Government work or to take sample of material used in any work. Right to Information includes the right to: 1. Inspect works, documents, records. 2. Take notes, extracts or certified copies of documents or records. 3. Take certified samples of material. 4. Obtain information in form of printouts, diskettes, floppies, tapes, video , cassettes or in any other electronic mode or through printouts. http://www.rtiindia.org

Objectives of Right to Information Act

www.cgg.gov.in/images/RTIAct2005CGGManual.doc Set out the practical regime of right to information for citizens to secure access to information under the control of public authorities, in order to promote transparency and accountability in the working of every public authority; Provide for the constitution of a Central Information Commission and State Information Commissions and for matters connected therewith or incidental thereto.

Object of the Right to Information Act http://rti.gov.in/RTICorner/Guideonrti.pdf /2008 The basic object of the Right to Information Act is to empower the citizens, promote transparency and accountability in the working of the Government, contain corruption, and make our democracy work for the people in real sense. It goes without saying that an informed citizen is better equipped to keep necessary vigil on the instruments of governance and make the government more accountable to the governed. The Act is a big step towards making the citizens informed about the activities of the Government

Section 4(1) (b) of the Act, in particular, requires every public authority (Ex- Insurance Companies, Banks, Pharma Companies etc;) to publish following sixteen categories of information: (i) The particulars of its organization, functions and duties;

(ii) The powers and duties of its officers and employees; (iii) The procedure followed in the decision making process, including channels of supervision and accountability; (iv) The norms set by it for the discharge of its functions; (v) The rules, regulations, instructions, manuals and records, held by it or under its control or used by its employees for discharging its functions; (vi) A statement of the categories of documents that are held by it or under its control; (vii) The particulars of any arrangement that exists for consultation with, or representation by, the members of the public in relation to the formulation of its policy or implementation thereof; (viii) A statement of the boards, councils, committees and other bodies consisting of two or more persons constituted as its part or for the purpose of its advice, and as to whether meetings of those boards, councils, committees and other bodies are open to the public, or the minutes of such meetings are accessible for public; (ix) Directory of its officers and employees; (x) The monthly remuneration received by each of its officers and employees, including the system of compensation as provided in its regulations; (xi) The budget allocated to each of its agency, indicating the particulars of all plans, propose expenditures and reports on disbursements made; (xii) The manner of execution of subsidy programmes, including the amounts allocated and the details of beneficiaries of such programmes; (xiii) Particulars of recipients of concessions, permits or authorisations granted by it; (xiv) Details in respect of the information, available to or held by it, reduced in an electronic form; (xv) The particulars of facilities available to citizens for obtaining information, including the working hours of a library or reading room, if maintained for public use; (xvi) The names, designations and other particulars of the Public Information Officers. http://rti.gov.in/RTICorner/Guideonrti.pdf /2008

Definition of Information
"Information" means any material in any form, including records, documents, memos, emails, opinions, advices, press releases, circulars, orders, logbooks, contracts, reports, papers, samples, models, data material held in any electronic form and information relating to any private body which can be accessed by a public authority under any other law for the time being in force.

"Record" includes: a)Any document, manuscript and file b) Any microfilm, microfiche, and facsimile copy of a document c) Any reproduction of image or images embodied in such microfilm (whether enlarged or not,

d) Any other material produced by a computer or any other device; An applicant cannot ask for opinions/advice/views under the RTI Act, unless the opinion/advice/view is already on "record". However, under Section 4(1)(d), an applicant can ask for "reasons" behind a administrative or quasi judicial decision of a public authority, especially if he is a "affected person". http://www.rtiindia.org Any material in any form, including records, documents, memos, e-mails, opinions, advices, press releases, circulars, orders, logbooks, contracts, reports, papers, samples, models, data material held in any electronic form and information relating to any private body which can be accessed by a public authority under any other law for the time being in force. www.cgg.gov.in/images/RTIAct2005CGGManual.doc Legal definition of Information in the context of the Right to Information Act, 2005 (PDF) is incorporated in section 2(f) of the said act, which reads as under : S.2(f) information means any material in any form, including records, documents, memos, e-mails, opinions, advices, press releases, circulars, orders, logbooks, contracts, reports, papers, samples, models, data material held in any electronic form and information relating to any private body which can be accessed by a public authority under any other law for the time being in force; Bombay high court (Goa Bench) Haryana Labour Journal June-Dec. 2007 http://hrylabour.gov.in/RTIAct.pdf http://notestomyself.wordpress.com/tag/right-to-information/

Why a Legal Framework Necessary? facilitate right to information leading to an informed citizenry and transparency of information which are vital to the functioning of democracy as established by the Constitution of India and also to contain corruption and to hold Governments and their instrumentalities accountable to the governed; harmonies conflicting interests in practice involved in revelation of information and other public interests such as efficient operations of government, optimum use of limited fiscal resources and the preservation of confidentiality of sensitive information while preserving the paramount of the democratic ideal.

Definition of Public Authority

any authority or body or institution of self-government established or constituted (a) by or under the Constitution; (b) by any other law made by Parliament; (c) by any other law made by State Legislature;

(d) by notification issued or order made by the appropriate Government; and includes any (i) body owned, controlled or substantially financed; (ii) Non-Government organization substantially financed, directly or indirectly by funds by the appropriate Government.

Public Authorities includes Government owned bodies, Banks, Insurance Companies etc; www.cgg.gov.in/images/RTIAct2005CGGManual.doc

RTI Act with respect to Insurance Business in India

IRDAs Obligation under the Act The Insurance Regulatory and Development Authority (IRDA) is a public authority as defined in the Right to Information Act, 2005. As such, the Insurance Regulatory and Development Authority is obliged to provide information to members of public in accordance with the provisions of the said Act. Access to the Information held by IRDA The right to information includes access to the information which is held by or under the control of any public authority and includes the right to inspect the work, document, records, taking notes, extracts or certified copies of documents / records and certified samples of the materials and obtaining information which is also stored in electronic form. IRDA Website The IRDA maintains an active website (URL: http://www.irda.gov.in ). The site is updated regularly and all the information released by the IRDA is also simultaneously made available on the website. The information published in public domain include the following: 1. Acts/Regulations 2. Information relating to Insurers/Reinsurers, Agents Training Institutes, Appointed Actuaries. 3. Information relating to Surveyors, Third Party Administrators, Insurance Brokers, Corporate, Agents 4. Information relating to Insurance Councils, Insurance Ombudsmen 5. Annual Report / IRDA Journal 6. Press Releases. Complaints against Insurance Companies IRDA has provided for a separate channel for lodging complaints against deficiency of services rendered by Insurance Companies. If you have a complaint/grievance against an insurance company for poor quality of service rendered by any of its offices/branches, please approach the Nodal Officer of the Insurance Company concerned. In case you are not satisfied with the Insurance Companys response you may also file a complaint with the Insurance Ombudsman in your State. The Insurance Ombudsman is an independent office to provide speedy and cost effective resolution of grievances to the customers.

Complaints from Policyholders Policyholders who have complaints against insurers are required to first approach the Grievance/Customer Complaints Cell of the concerned insurer. If they do not receive a response from insurer(s) within a reasonable period of time or are dissatisfied with the response of the company, they may approach the Grievance Cell of the IRDA. http://irdaho/irdaweb/grievancescell.htm Making an Application under the Right to Information Act, 2005 Citizens of India will have to make the request for information in writing, clearly specifying the information sought under the Right to Information Act, 2005. The application for request should give the contact details (postal address, telephone number, fax number, email address) so that the applicants can be contacted for clarifications or for further information. As per the Act, information can be furnished only to citizens of India but not to others. How do I send my application? As per the Right to Information (Regulation of Fee and Cost) Rules, 2005 prescribed by the Government of India: a request for obtaining information under Section 6(1) of RTI needs to be accompanied by an application fee of Rs.10 by way of cash against proper receipt or by DD or bankers cheque. You could send your request by post accompanied by the application fee of Rs.10/- payable by demand draft or bankers cheque favouring Insurance Regulatory and Development Authority. The fee can also be paid in cash along with the application. Applications can also be made over fax or email. IRDA will take up the application for consideration, as required under the Act, only after the application fee has been received. Where do I send my request? You can send your request addressed to any of the concerned Central Public Information Officers (CPIOs) indicated below :

Department

Functional Name ande-mail Areas Designation of CPIO Actuarial Actuarial Mr. S.P.Chakravarthy,shyama@irda.gov.in Returns, D.D. Appointed Actuary System, File & Use of Life Products and other actuarial matters. Life Life Returns,Mr.D.V.S.Ramesh, dvsramesh@irda.gov.in Market conductD.D. issues, Micro Insurance, Agents, Corporate Agents, ATI (Agents Training Institutions) and Referrals, approval of Branch Offices of Insurers, etc. Non-Life Reinsurance, FileMr. N.M.Bahera,nmbehera@irda.gov.in & Use ofD.D(Health) sridhar@irda.gov.in products, Mr.K.Sridhar, A.Dkmahipalreddy@irda.gov.in Surveyors, (Non-Life) Approval ofMr.K.Mahipal Reddy, Branch Offices ofD.D (Broker) Insurers and other matters relating to General Insurers and Reinsurer(s), Brokers, TPAs. F&I Accounts &Mr. Mahesh Agarwal, maheshagarwal@irda.gov.in Investments of Insurers and also registration of new Insurers, approval of appointment and remuneration of CEOs of Insurers, etc. Administration, HR, RecruitmentMr.B.Raghavan, raghvanb@irda.gov.in

Inspection Consumer Affairs

& and training,Sr.AD Promotions, Vigilance etc. and office services,IT, International affairs, Internal Audit and Legal affairs and any other residual matters. Policyholders Mr.A.Krishnan,DD interests both life and non-life ( Grievances, advertisments, Ombudsman etc) Liaison work Mr. Rakesh DD,ACPIO a.krishnan@irda.gov.in

Consumer Affairs Department

Delhi Office

Bajaj,rakesh@irda.gov.in

Postal Address Insurance Regulatory and Development Authority, 3rd Floor, Parisrama Bhavan, Basheer Bagh HYDERABAD 500 004 Ph: (040) 23381100 Fax: (040) 6682 3334 How long will IRDA take to provide information? IRDA will, within 30 days of receipt of the application for information along with the fee, communicate to the requestor whether it can or cannot provide the information.

Will I have to pay to get the information? As per the Right to Information (Regulation of Fee and Cost) Rules, 2005, the public authority shall charge:-Rs.2/- for each page (in A-4 or A-3 size paper) created or copied; actual charge or cost price of a copy in larger size paper; actual cost or price for samples or models; and for inspection of records, no fee for the first hour; and a fee of Rs.5/- for each 15 minutes (or fraction thereof thereafter). Further, to provide information under Section 7(5) of the Right to Information Act, 2005, the public authority shall charge: Rs. 50/- per diskette or floppy; and for information provided in printed form at the price fixed

for such publication or Rs. 2/- per page of photocopy for extracts from the publication. At what stage will I have to pay this cost? If IRDA has the information and can provide it to you it will, within 30 days of its receiving the application along with appropriate fees, communicate to you the cost of providing the information as prescribed under Section 7(1) of Right to Information Act. When will I get the information? You will get the information, once IRDA receives the payment towards providing the information. Can IRDA refuse to give me information? The Right to Information Act, 2005 under Sections 8 and 9 exempts certain categories of information from disclosures. These include: Information, disclosure of which would prejudicially affect the sovereignty and integrity of India, the security, strategic, scientific or economic interests of the State, relation with foreign State or lead to incitement of an offence. Information which has been expressly forbidden to be published by any court of law or tribunal or the disclosure of which may constitute contempt of court; Information, the disclosure of which would cause a breach of privilege of Parliament or the State Legislature; Information including commercial confidence, trade secrets or intellectual property, the disclosure of which would harm the competitive position of a third party, unless the competent authority is satisfied that larger public interest warrants the disclosure of such information; Information available to a person in his fiduciary relationship, unless the competent authority is satisfied that the larger public interest warrants the disclosure of such information; Information received in confidence from foreign Government; information, the disclosure of which would endanger the life or physical safety of any person or identify the source of information or assistance given in confidence for law enforcement or security purposes;

 Information which would impede the process of investigation or apprehension or prosecution of offenders; Cabinet papers including records of deliberations of the Council of Ministers, Secretaries and other officers; Information which relates to personal information the disclosure of which has no relationship to any public activity or interest, or which would cause unwarranted invasion of the privacy of the individual. Do I have a right to appeal? Under the Right to Information Act, 2005 you have the right to appeal if you are not satisfied with the information provided by IRDA or its decision not to provide the information requested. Who should I address my appeal to? You can address the appeal to: Shri.H.Ananthakrishnan Officer on Special Duty ( Legal ),Insurance Regulatory and Development Authority, 3rd Floor, Parisrama Bhavan, Basheer Bagh HYDERABAD 500 04 Ph: (040) 23381100 (D) 23381243 Fax: (040) 6682 3334 What if I am not satisfied even with the decision of the appellate authority? Under the Act, if you are not satisfied with the decision of the appellate authority within IRDA, you can appeal to the Central Information Commissioner appointed in terms of Chapter 3 of the Right to Information Act, 2005.

Functions of Ombudsman
The institution of Insurance Ombudsman was created by a Government of India Notification dated 11th November, 1998 with the purpose of quick disposal of the grievances of the insured customers and to mitigate their problems involved in redressal of those grievances. This institution is of great importance and relevance for the protection of interests of policy holders and also in building their confidence in the system. The institution has helped to generate and sustain the faith and confidence amongst the consumers and insurers. Appointment of Insurance Ombudsman

The governing body of insurance council issues orders of appointment of the insurance Ombudsman on the recommendations of the committee comprising of Chairman, IRDA, Chairman, LIC, Chairman, GIC and a representative of the Central Government. Insurance council comprises of members of the Life Insurance council and general insurance council formed under Section 40 C of the Insurance Act, 1938. The governing body of insurance council consists of representatives of insurance companies. Eligibility Ombudsman are drawn from Insurance Industry, Civil Services and Judicial Services. Terms of office An insurance Ombudsman is appointed for a term of three years or till the incumbent attains the age of sixty five years, whichever is earlier. Re-appointment is not permitted.. Territorial jurisdiction of Ombudsman he governing body has appointed twelve Ombudsman across the country allotting them different geographical areas as their areas of jurisdiction. The Ombudsman may hold sitting at various places within their area of jurisdiction in order to expedite disposal of complaints. The offices of the twelve insurance Ombudsmans are located at (1) Bhopal, (2) Bhubaneswar, (3) Cochin, (4) Guwahati, (5) Chandigarh, (6) New Delhi, (7) Chennai, (8) Kolkata, (9) Ahmedabad, (10) Lucknow, (11) Mumbai, (12) Hyderabad. The areas of jurisdiction of each Ombudsman has been mentioned in the list of Ombudsman. Office Management The Ombudsman has a secretarial staff provided to him by the insurance council to assist him in discharging his duties. The total expenses on Ombudsman and his staff are incurred by the insurance companies who are members of the insurance council in such proportion as may be decided by the governing body.

Removal from office An Ombudsman may be removed from service for gross misconduct committed by him during his term of office. The governing body may appoint such person as it thinks fit to conduct enquiry in relation to misconduct of the Ombudsman. All enquiries on misconduct will be sent to Insurance Regulatory and Development Authority which may take a decision as to the proposed action to be taken against the Ombudsman. On recommendations of the IRDA, the Governing Body may terminate his services, in case he is found guilty. Power of Ombudsman

Insurance Ombudsman has two types of functions to perform (1) conciliation, (2) Award making. The insurance Ombudsman is empowered to receive and consider complaints in respect of personal lines of insurance from any person who has any grievance against an insurer. The complaint may relate to any grievance against the insurer i.e. (a) any partial or total repudiation of claims by the insurance companies, (b) dispute with regard to premium paid or payable in terms of the policy, (c) dispute on the legal construction of the policy wordings in case such dispute relates to claims; (d) delay in settlement of claims and (e) non-issuance of any insurance document to customers after receipt of premium. Ombudsman's powers are restricted to insurance contracts of value not exceeding Rs. 20 lakhs. The insurance companies are required to honour the awards passed by an Insurance Ombudsman within three months. Manner of lodging complaint The complaint by an aggrieved person has to be in writing, and addressed to the insurance Ombudsman of the jurisdiction under which the office of the insurer falls. The complaint can also be lodged through the legal heirs of the insured. Before lodging a complaint: i) the complainant should have made a representation to the insurer named in the complaint and the insurer either should have rejected the complaint or the complainant have not received any reply within a period of one month after the concerned insurer has received his complaint or he is not satisfied with the reply of the insurer. ii) The complaint is not made later than one year after the insurer had replied. iii) The same complaint on the subject should not be pending with before any court, consumer forum or arbitrator. Recommendations of the Ombudsman When a complaint is settled through the mediation of the Ombudsman, he shall make the recommendations which he thinks fair in the circumstances of the case. Such a recommendation shall be made not later than one month and copies of the same sent to complainant and the insurance company concerned. If the complainant accepts recommendations, he will send a communication in writing within 15 days of the date of receipt accepting the settlement. Award The ombudsman shall pass an award within a period of three months from the receipt of the complaint. The awards are binding upon the insurance companies. If the policy holder is not satisfied with the award of the Ombudsman he can approach other venues like Consumer Forums and Courts of law for redressed of his grievances. As per the policy-holder's protection regulations, every insurer shall inform the policy holder along with the policy document in respect of the insurance Ombudsman in whose jurisdiction his office falls for the purpose of grievances redressed arising if any subsequently.

Steady increase in number of complaints received by various Ombudsman shows that the policy-holders are reposing their confidence in the institution of Insurance Ombudsman.

OBLIGATIONS OF INSURERS TO RURAL AND SOCIAL SECTOR

In exercise of the powers conferred by section 32C read with section 32B of the Insurance Act, 1938, (4 of 1938), the Authority, in consultation with the Insurance Advisory Committee, hereby makes the following regulations to substitute the Insurance Regulatory and Development Authority (Obligations of Insurers to Rural Social Sectors) Regulations, 2000, namely: Short title and commencement

(1) These regulations may be called the Insurance Regulatory and Development Authority (Obligations of Insurers to Rural or Social Sectors) Regulations, 2002. (2) They shall come into force from the date of their publication in the Official Gazette.

Definitions In these regulations, unless the context otherwise requires (a) Act means the Insurance Act, 1938 (4 of 1938); (b) Authority means the Insurance Regulatory and Development Authority established under the provisions of section 3 of the Insurance Regulatory and Development Authority Act, 1999 (41 of 1999); (c) Rural sector shall mean any place as per the latest census which meets the following criteria (i) a population of less than five thousand; (ii) a density of population of less than four hundred per square kilometer; and (iii) more than twenty five per cent of the male working population is engaged in agricultural pursuits. Explanation : The categories of workers falling under agricultural pursuits are as under: (i) Cultivators; (ii) Agricultural labourers (iii) Workers in livestock, forestry, fishing, hunting and plantations, orchards and allied activities. (d) Social sector includes unorganised sector, informal sector, economically vulnerable or backward classes and other categories of persons, both in rural and urban areas; (e) Unorganised sector includes self-employed workers such as agricultural labourers, bidi workers, brick kiln workers, carpenters, cobblers, construction workers, fishermen, hamals, handicraft artisans, handloom and khadi workers, lady tailors, leather and tannery workers, papad makers, powerloom workers, physically handicapped selfemployed persons, primary milk producers, rickshaw pullers, safai karmacharis, salt growers, seri culture workers, sugarcane cutters, tendu leaf collectors, toddy tappers, vegetable vendors, washerwomen, working women in hills, or such other categories of persons., (f) economically vulnerable or backward classes means persons who live below the poverty line; (g) other categories of persons includes persons with disability as defined in the Persons with Disabilities (Equal Opportunities, Protection of Rights, and Full Participation) Act, 1995 and who may not be gainfully employed; and also includes guardians who need insurance to protect spastic persons or persons with disability;

(h) informal sector includes small scale, self-employed workers typically at a low level of organisation and technology, with the primary objective of generating employment and income, with heterogeneous activities like retail trade, transport, repair and maintenance, construction, personal and domestic services and manufacturing, with the work mostly labour intensive, having often unwritten and informal employer-employee relationship; (h) All words and expressions used herein and not defined herein but defined in the Insurance Act, 1938 (4 of 1938), or in the Insurance Regulatory and Development Authority Act, 1999 (41 of 1999), shall have the meanings respectively assigned to them in those Acts. Obligations Every insurer, who begins to carry on insurance business after the commencement of the Insurance Regulatory and Development Authority Act, 1999 (41 of 1999), shall, for the purposes of sections 32B and 32C of the Act, ensure that he undertakes the following obligations, during the first five financial years, pertaining to the persons in(a) rural sector, (i) in respect of a life insurer, seven per cent in the first financial year; nine per cent inthe second financial year; Twelve per cent in the third financial year; Fourteen per cent in the fourth financial year; Sixteen per cent in the fifth year; of total policies written direct in that year; (ii) in respect of a general insurer two per cent in the first financial year; three per cent in the second financial year; five per cent there after, of total gross premium income written direct in that year. (b) social sector, in respect of all insurers, five thousand lives in the first financial year; seven thousand five hundred lives in the second financial year; ten thousand lives in the third financial year; fifteen thousand lives in the fourth financial year; twenty thousand lives in the fifth year; Provided that in the first financial year, where the period of operation is less than twelve months, proportionate percentage or number of lives, as the case may be, shall be undertaken. Provided further that, in case of a general insurer, the obligations specified shall include insurance for crops.

Provided further that the Authority may normally, once in every five years, prescribe or revise the obligations as specified in this Regulation. 4. Obligations of existing insurers (1) The obligations of existing insurers as on the date of commencement of IRDA Act shall be decided by the Authority after consultation with them and the quantum of insurance business to be done shall not be less than what has been recorded by them for the accounting year ended 31st March, 2002. (2) The Authority shall review such quantum of insurance business periodically and give directions to the insurers for achieving the specified targets. (source: IRDA notification) Obligations in the sixth year of operations In exercise of the powers conferred by Section 32C read with Section 32B of the Insurance Act. 1938 the Authority had notified the IRDA (Obligation of insurers to rural or social sectors) Regulations, 2000. The said Regulations were further substituted by IRDA (Obligation of insurers to rural or social sectors) Regulations, 2002. The Regulations provide for the obligations towards rural and social sectors for both life and non-life insurers during the first five financial years. The Regulations further provide that the Authority shall review such quantum of insurance business periodically and give directions to the insurers for achieving the specified targets. Since some of the insurers are in the sixth year of their operations during the financial year 2005-06, the following directions are issued for compliance of rural and social sector obligations in the said year: 1) In respect of life insurers, eighteen per cent of the total policies written direct shall be in the rural sector. 2) In respect of the non-life insurers, five per cent of the total gross premium income written direct shall be in the rural sector and 3) In respect of all insurers, twenty five thousand new lives shall be covered in the social sector and the policies should be in force on 31st March of the year. For the present, the obligations for the insurers existing as on the date of commencement of the IRDA Act shall continue to be the same as provided in the Regulations earlier notified Consistency in compliance with the obligation: On the basis of the monthly premium statistics furnished with the Authority, it has been observed that insurers do not spread out their obligations towards the rural and social sectors during the course of the year. Rather, the compliance is achieved during the last two months of a given

financial year. All insurers are advised to take steps to ensure that compliance with the rural and social obligations is uniformly spread over a given financial year. The Authority would be reviewing the performance of the insurers towards rural and social sector obligations on a quarterly basis. All insurers are required to strictly adhere to the directive. All insurers are required to take note for compliance. (source: IRDA Cir. No. IRDA/F&A/012/2005-06) Failure to meet social, rural obligations IRDA slaps notices on seven insurance cos In a significant move, the Insurance Regulatory and Development Authority (IRDA) has slapped notices on five life and two non-life insurers belonging to both public sector and private, who failed to meet the stipulated levels of obligations in rural and social sectors. The failure was more in meeting the social sector obligations. While the performance of five out of eleven life insurers was not satisfactory in meeting the obligations, IRDA officials told Business Line that two of the six non-life players had not attended to the social segment. Stating that "notices have been issued to them seeking explanations for non-performance," the officials, however, declined to name the errant insurers. Asking the insurers to fulfil their obligations for rural and social sectors on an annual basis, IRDA had earlier laid down stringent penal provisions for non-compliance. While redefining certain terms, the authority recently raised the obligations for life insurers towards rural sector. Of the 11 private sector life insurers, ten companies substantially performed in the rural sector with the percentage of policies issued in the rural sector standing higher than five per cent level mentioned for the first year of operations. Even those companies, which started their business during the close of the previous accounting year, also achieved the five per cent rural obligation. "In one case, there has been a marginal deficiency and notice to that company has been issued," the IRDA officials said. In the social sector obligations, the yardstick for performance was the total number of lives to be insured by the insurer. According to the officials, the performance of the life insurance companies in the social sector was slightly less than satisfactory compared to rural sector. "Five out of eleven companies had not achieved the required number of lives. Some of theses companies started operating during the year and some had, even after the grant of registration, had taken a considerable time to train their agency force. Information is sought

from them as to the deficiencies in this area and after completion of the enquiry, action, if necessary, will be taken soon," the officials said. Most of the non-life insurers achieved the base level of two per cent of gross premium from rural sector, except for one company which had difficulties in organising itself in this area. According to IRDA officials, "the performance of the public sector companies has been rather tepid in this area. The satisfaction level varies from 1.5 per cent to 4.3 per cent. Necessary enquiries are being made with these companies about the compelling circumstances which had affected their performance." However, according to the IRDA officials, by-and-large, both life and non-life players have started taking their obligations seriously and were adopting novel ways to reach the targets. (source: Business Line, Jan o7, 2003)

REFERENCES

http://www.persmin.nic.in http://rti.gov.in/RTICorner/Guideonrti.pdf /2008 http://hrylabour.gov.in/RTIAct.pdf

www.cgg.gov.in/images/RTIAct2005CGGManual.doc http://www.rtiindia.org http://rti.gov.in/RTICorner/Guideonrti.pdf /2008 http://notestomyself.wordpress.com/tag/right-toinformation/ http://irdaho/irdaweb/grievancescell.htm IRDA Cir. No. IRDA/F&A/012/2005-06 Business Line, Jan o7, 2003
IRDA Circular no 08/2007/13.06.11

Haryana Labour Journal June-Dec. 2007