Current Affairs 31 March 2023

CONTENTS

1. IRDAI removes commission limit for agents
2. The piezoelectric effect in liquids
3. National Company Law Appellate Tribunal (NCLAT)
4. Higher Education Financing Agency(HEFA)

IRDAI Removes Commission Limit For Agents

Context:

The Insurance Regulatory and Development Authority of India (IRDAI) has lifted limits on the payment of commissions to insurance intermediaries.

Relevance:

GS II: Polity and Governance (Regulatory Bodies)

Dimensions of the Article:

1. Details
2. What does the new IRDAI rule say?
3. How will this move benefit insurance companies and agents?
4. What benefit will consumers get?
5. Insurance Regulatory and Development Authority of India (IRDAI)

Details:

• Life and non-life players will have more freedom in offering commissions – the compensation paid to and received by an insurance agent from an insurer for soliciting and procuring an insurance policy.
• However, the commission will have to be within their overall Expenses of Management (EOM) and insurers can have board-approved limits for paying commissions to their agents.
  • Expenses of Management (EOM) include all expenses in the nature of operating expenses of general or health Insurance business and commission to the insurance agents or insurance intermediaries. It also includes commission and expenses on reinsurance inward, which are charged to the revenue account.
• IRDAI said the regulation will come into force from April 1, 2023, and will remain in force for a period of three years thereafter.
• Insurance intermediaries include corporate agents, insurance brokers, web aggregators, insurance marketing firms and a common public service centre – SPV.

What does the new IRDAI rule say?

• IRDAI has asked insurance companies, including life and non-life, to fix an overall cap on commission to agents, brokers and other intermediaries, giving more flexibility to insurers in managing their expenses.
• This means the regulator has replaced the earlier cap on different commission payments to various types of intermediaries with an overall board-approved cap which should be within the allowed expenses.
• Objective: This rationale of the regulation is to enable and provide flexibility to the insurers, both life and general insurers, to manage their expenses within the overall limits based on their gross written premium to optimally utilize their resources for enhancing benefits to policyholders.

How will this move benefit insurance companies and agents?

• Major Reform: The removal of the cap on commission payments is welcomed by insurance sector participants and is considered a significant reform.
• Higher Commission: With the new regulation, insurance companies can pay a higher commission to agents if they bring in good business that is claim-free.
• Liberty to Give Commission: The liberty to give commission to an agent is left to the company.
• Facilitates Innovation: The new norms will facilitate greater product innovation and development of new product distribution models, making operations more customer-centric.
• Increases Insurance Penetration: The proposed regulations will increase insurance penetration, provide flexibility to insurers in managing their expenses and overall smoothen adherence to compliance norms.
• Ensures Parity: The proposed regulations will ensure parity across varying business models and greater flexibility in managing expenses for insurers.

What benefit will consumers get?

• Post the changes in regulations, insurance agents are likely to be more interested in selling insurance products and explain policy details to consumers beforehand.
• The claim ratio of these agents will also be better.
• When claim outgoes are within the overall manageable limit, an insurance company may not increase the premium, which will be beneficial for consumers.
• The move will also help in increasing insurance penetration as agents will get higher commissions.

Insurance Regulatory and Development Authority of India (IRDAI)

• The Insurance Regulatory and Development Authority of India or the IRDAI is the apex body responsible for regulating and developing the insurance industry in India.
• It is an autonomous body. It was established by an act of Parliament known as the Insurance Regulatory and Development Authority Act, 1999. Hence, it is a statutory body.
• The IRDAI is headquartered in Hyderabad in Telangana. Prior to 2001, it was headquartered in New Delhi.

The functions of the IRDA are listed below:

• Its primary purpose is to protect the rights of the policyholders in India.
• It gives the registration certificate to insurance companies in the country.
• It also engages in the renewal, modification, cancellation, etc. of this registration.
• It also creates regulations to protect policyholders’ interests in India.

The Section 4 of the Insurance Regulatory Development Authority (IRDA) Act, 1999 specifies the composition of authority which consists of a 10-member team appointed by the government of India which includes.

• One chairman
• Five whole time members
• Four part time members

-Source: Indian Express

The Piezoelectric Effect in Liquids

Context:

For the first time, scientists have reported evidence of the piezoelectric effect in liquids.

Relevance:

GS III: Science and Technology

Dimensions of the Article:

1. Details
2. What is the piezoelectric effect?
3. Why is the effect in liquids surprising?
4. What new applications are possible?

Details:

• The effect has been known for 143 years and in this time has been observed only in solids.
• The new finding challenges the theory that describes this effect as well as opens the door to previously unanticipated applications in electronic and mechanical systems.
• The effect was found in pure 1-butyl-3-methyl imidazolium bis(trifluoromethyl-sulfonyl)imide and 1-hexyl-3-methyl imidazolium bis(trifluoromethylsulfonyl)imide — both ionic liquids (liquids which are made of ions instead of molecules) at room temperature.

What is the piezoelectric effect?

• In the piezoelectric effect, a body develops an electric current when it is squeezed.
• Quartz is the most famous piezoelectric crystal; it is used in analog wristwatches and clocks. Such crystals are also used in other instruments where converting mechanical stress to a current is useful.
• Quartz is silicon dioxide (SiO2). The quartz crystal consists of silicon and oxygen atoms at the four vertices of a three-sided pyramid; each oxygen atom is shared by two pyramids.
• These pyramids repeat themselves to form the crystal.
• The effective charge of each pyramid is located slightly away from the centre.
• When a mechanical stress is applied, that is when the crystal is squeezed, the position of the charge is pushed further from the centre, giving rise to a small voltage. This is the source of the effect.

Why is the effect in liquids surprising?

• Lack of Organized Structure: The piezoelectric effect is expected to occur in solids because they have an organized structure, which allows them to maintain a stable shape under pressure. Liquids, on the other hand, do not have such a structure and take the shape of the container they are in.
• Non-Compressible: Hooke’s law, which explains the linear relationship between force and compression, is not clear when the body being squeezed is not very compressible.
• Inconsistency with Current Model: The observation of the piezoelectric effect in ionic liquids appears to be inconsistent with the current model, which requires “persistent” order within the material.
• Existence of Organization: The discovery of the piezoelectric effect in ionic liquids suggests that there is some manner of organization within these liquids that is not seen in “normal” liquids.
• Molecular-Level Response: Normal and ionic liquids of the kind tested in the study respond very differently at the molecular level when an electric charge is imposed on them.

What new applications are possible?

• More Accessible Applications: According to the paper, the discovery opens the door to applications that were previously not accessible with solid-state materials. This could lead to the development of new technologies that were not possible before.
• Recyclability and Environmental Benefits: Room-temperature ionic liquids are more readily recyclable and pose fewer environmental issues than many currently used piezoelectric materials.
• Dynamic Focusing Abilities: The inverse piezoelectric effect displayed by the liquids could be used to control how they bend light passing through them by passing different currents through them. This could lead to the development of vials of these liquids that act as lenses with dynamic focusing abilities.
• Better Understanding of Behaviour: Having a theory to explain the liquids’ behavior could reveal why they behave the way they do, which could lead to the development of newer and better applications.

-Source: The Hindu

National Company Law Appellate Tribunal (NCLAT)

Context:

Recently, the National Company Law Appellate Tribunal (NCLAT) upheld the ₹1,337 crore fines imposed on Google by the Competition Commission of India (CCI).

Relevance:

GS II: Polity and Governance (Regulatory Bodies)

Dimensions of the Article:

1. What did the NCLAT find Google guilty of?
2. About National Company Law Appellate Tribunal (NCLAT):
3. About competition commission of India:

What did the NCLAT find Google guilty of?

• The National Company Law Appellate Tribunal (NCLAT) found Google guilty of abusing its market dominance in the Android ecosystem.
• The NCLAT’s order largely confirmed the Competition Commission of India’s (CCI) findings from October 2020.
• The order held that Google’s mandating pre-installation of its Google Mobile Suite (GMS) amounted to imposing unfair conditions on Original Equipment Manufacturers (OEMs).
• Google’s requirement of OEMs to sign various agreements, such as the Anti-fragmentation Agreement (AFA) and Android Compatibility Commitment Agreement (ACC), before pre-installing its GMS suite, was found to have reduced the ability and incentive of manufacturers to develop and sell self-device operating or alternative versions of Android and Android Forks.
• By bundling products like its search engine or the Chrome browser, Google perpetuated its dominant position, the NCLAT said.
• The NCLAT held that the CCI’s order against Google did not violate the principles of “natural justice” and was based on relevant material submitted to it.
• It is unclear if Google will challenge the NCLAT order, but a Google spokesperson said that the company was evaluating its legal options.

About National Company Law Appellate Tribunal (NCLAT):

The National Company Law Appellate Tribunal (NCLAT) is a judicial body established under Section 410 of the Companies Act, 2013.

Functions:

• Hearing appeals: The primary function of NCLAT is to hear appeals against the orders of the National Company Law Tribunal(s) (NCLT) under Section 61 of the Insolvency and Bankruptcy Code, 2016 (IBC).
  • Appeals against CCI: NCLAT also hears and disposes of appeals against any direction issued or decision made or order passed by the Competition Commission of India (CCI).
  • Appeals against National Financial Reporting Authority: NCLAT is also responsible for hearing and disposing of appeals against the orders of the National Financial Reporting Authority.

About competition commission of India:

Nodal: Ministry of Corporate affairs

• Competition Commission of India (CCI) is a statutory body of the Government of India responsible for enforcing the Competition Act, 2002.
• Competition Commission of India aims to establish a robust competitive environment.
• Through proactive engagement with all stakeholders, including consumers, industry, government and international jurisdictions.
• By being a knowledge intensive organization with high competence level.
• Through professionalism, transparency, resolve and wisdom in enforcement.

Composition of CCI

• The Commission consists of one Chairperson and six Members.
• The commission is a quasi-judicial body .

Eligibility of members: 

The Chairperson and every other Member shall be a person of ability, integrity and standing and who, has been, or is qualified to be a judge of a High Court, or, has special knowledge of, and professional experience of not less than fifteen years in international trade, economics, business, commerce, law, finance, accountancy, management, industry, public affairs, administration or in any other matter which, in the opinion of the Central Government, may be useful to the Commission.

-Source: Indian Express

Higher Education Financing Agency (HEFA)

Context:

Recently, a Parliamentary panel has asked the Ministry of Education to make more efforts to ensure the “speedy disbursal” of sanctioned loans by the Higher Education Financing Agency (HEFA).

Relevance:

GS II: Polity and Governance (Regulatory Bodies)

Dimensions of the Article:

1. About Higher Education Financing Agency:
2. Objectives

About Higher Education Financing Agency:

• HEFA was established on 31st May 2017.
• It is registered under Section 8 as a Not-for-profit under the Companies Act 2013 as a Union Govt company and as Non–deposit-taking Systemically Important (NBFC-ND-SI) with RBI.
• It is a joint venture of the Ministry of Education, GoI and Canara Bank with agreed equity participation in the ratio of 90.91% and 09.09% respectively.

Objectives:

• HEFA provides financial assistance for the creation of capital assets in premier educational institutions in India.
• The main aim is to improve the academic and infrastructure quality of India’s top-ranked institutions like IITs, IIITs, NITs, IISCs, and AIIMS, and enable them to become globally top-ranking institutions.
• HEFA is particularly interested in financing the building of educational infrastructure and R&D infrastructure.