Insurance Regulatory and Development Authority of India(IRDAI)
Insurance Regulatory and Development Authority of India(IRDAI) is a statutory body set up for protecting the interests of the policyholders and regulating, promoting and ensuring orderly growth of the insurance industry in India.
Brief History of IRDAI
- 1991: Government of India begins the economic reforms program and financial sector reforms
- 1993: Committee on Reforms in the Insurance Sector, headed by Shri R. N. Malhotra (Retired Governor, Reserve Bank of India) set up to recommend reforms in insurance sector.
- 1994: Malhotra Committee recommends reforms after studying the insurance sector and taking inputs from all the stakeholders. Key recommendations of Malhotra Committee are:
- Private sector companies should be allowed to promote insurance companies
- Foreign promoters should also be allowed
- Government to vest its regulatory powers on an independent regulatory body answerable to Parliament
- 1996: Setting up of an interim body called the Insurance Regulatory Authority
- 1999: Enactment of the Insurance Regulatory and Development Authority of India(IRDAI) Act, 1999
- 2000: Formation of the Insurance Regulatory and Development Authority of India as an autonomous regulatory body on 19.4.2000
Since 2000, IRDAI has been serving as an independent regulatory authority for the insurance industry and to instill confidence among the policyholders in the financial viability of the insurance companies. IRDAI has been playing a pivotal role in the insurance sector with a fundamental commitment to discharge its mandate for orderly growth of insurance sector.
IRDAI has played a very important role in the growth and development of the sector by protecting policyholders’ interests; registering and regulating insurance companies; licensing and establishing norms for insurance intermediaries, regulating and overseeing premium rates and terms of non-life insurance covers; specifying financial reporting norms, regulating investment of policyholders’ funds and ensuring the maintenance of solvency margin by insurance companies; ensuring insurance coverage in rural areas and of vulnerable sections of society; promoting professional organisations connected with insurance and all other allied and development functions.
Insurance Regulatory and Development Authority of India (IRDAI) consists a Chairman, Five Whole time Members and Four Part time members in the administration. However, the regulations are enacted under the guidance of a statutory advisory committee.
Mission statement of the authority
- To protect the interest of and secure fair treatment to policyholders
- To bring about speedy and orderly growth of the insurance industry (including annuity and superannuation payments), for the benefit of the common man, and to provide long term funds for accelerating growth of the economy
- To set, promote, monitor and enforce high standards of integrity, financial soundness, fair dealing and competence of those it regulates
- To ensure speedy settlement of genuine claims, to prevent insurance frauds and other malpractices and put in place effective grievance redressal machinery
- To promote fairness, transparency and orderly conduct in financial markets dealing with insurance and build a reliable management information system to enforce high standards of financial soundness amongst market players
- To take action where such standards are inadequate or ineffectively enforced
- To bring about optimum amount of self-regulation in day-to-day working of the industry consistent with the requirements of prudential regulation
According to the Section 14 of IRDAI Act of 1999 there are certain duties, powers and functions laid down for the IRDAI and they are as follows:
- Subject to the provisions of this Act and any other law for the time being in force, the Authority shall have the duty to regulate, promote and ensure orderly growth of the insurance business and re-insurance business.
- Without prejudice to the generality of the provisions contained in sub-section (1), the powers and functions of the Authority shall include,
- Issue to the applicant a certificate of registration, renew, modify, withdraw, suspend or cancel such registration;
- protection of the interests of the policy holders in matters concerning assigning of policy, nomination by policy holders, insurable interest, settlement of insurance claim, surrender value of policy and other terms and conditions of contracts of insurance;
- Specifying requisite qualifications, code of conduct and practical training for intermediary or insurance intermediaries and agents;
- Specifying the code of conduct for surveyors and loss assessors;
- Promoting efficiency in the conduct of insurance business;
- Promoting and regulating professional organizations connected with the insurance and re-insurance business;
- Levying fees and other charges for carrying out the purposes of this Act;
- calling for information from, undertaking inspection of, conducting enquiries and investigations including audit of the insurers, intermediaries, insurance intermediaries and other organizations connected with the insurance business;
- control and regulation of the rates, advantages, terms and conditions that may be offered by insurers in respect of general insurance business not so controlled and regulated by the Tariff Advisory Committee under section 64U of the Insurance Act, 1938 (4 of 1938);
- Specifying the form and manner in which books of account shall be maintained and statement of accounts shall be rendered by insurers and other insurance intermediaries;
- Regulating investment of funds by insurance companies;
- Regulating maintenance of margin of solvency;
- Adjudication of disputes between insurers and intermediaries or insurance intermediaries;
- Supervising the functioning of the Tariff Advisory Committee;
- Specifying the percentage of premium income of the insurer to finance schemes for promoting and regulating professional organizations referred to in clause (f);
- Specifying the percentage of life insurance business and general insurance business to be undertaken by the insurer in the rural or social sector; and
- Exercising such other powers as may be prescribed