Clarification on IIRM

The former Chairman of the (IRDA), N. Rangachary, has issued the following statement on the public controversy over the Institute of Insurance and Risk Management:

Issue 1: The necessity to have an institute:

The institute will act as the research facility of the Insurance Regulatory Development Authority (IRDA). Its establishment has been recommended by the insurance companies and members of the Insurance Advisory Committee. The research activity carried on in the institute will develop Indian insurance business.

Issue 2: Three persons including myself have been made life-time directors of the Institute:

The appointment is only as directors not subject to retirement by rotation. The first meeting of the directors of the institute decided that the directors representing the three founders would be holding office at the pleasure of their organisations which can withdraw the nominations and appoint somebody else.

Issue 3: I have provided for myself a pension policy and the continuation of employment beyond June 9, 2003:

The employment with IRDA and consequently with the IIRM did not give me any added pension benefits. My pension entitlement as a government servant was decided as long ago as June, 1996. Further, by my letter dated May 22, I had clearly indicated to the Government that I will not be subsequent to June 9, 2003 be part of the IRDA and IIRM. There is, therefore, no question of my being part of the IRDA and IIRM. I had clearly stated in my letter of May 22 that my continuance with IIRM beyond June 9, 2003 does not arise.

Issue 4: Funds have been placed with IIRM by IRDA:

As early as October 2002, Rs. 10 crores was placed in endowment with IIRM. Interest arising out of this endowment is to be used for research activities at the IIRM. The endowment is supervised by the Board of trustee consisting of five persons including two representatives of the IRDA. No prior approval of any authority is required under the IRDA Act.

Issue 5: Competence of IRDA to set up the IIRM:

Section 14 of the IRDA Act enables the Authority to set up research organisation in the insurance and re-insurance areas. For the purpose, the Authority has also been authorised to raise a levy from the insurance companies.

It is to be stated that the funds of the IRDA are wholly derived from insurance companies and insurance intermediaries and therefore the utilisation of part of funds to reflect the needs of the insurance industry for research in risk management was considered worthwhile.

I would like to emphasise that from June 9, 2003, the day I retired from the IRDA, I m not the Chairman of the IIRM. IRDA has to find a nominee to be appointed in my place.

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