Insurance regulatory and Development Authority (IRDA)
Insurance Regulatory Development Authority (IRDA) is a statutory body set up by the IRDA Act, 1999. It is an autonomous and apex body which has the responsibility to regulate and control the Insurance sector in India. Insurance Regulatory Development Authority (IRDA) was established after the recommendations of Malhotra Committee report of 1994. The committee had recommended for the establishment of an independent authority for the regulation of Insurance sector in India. Thus Insurance Regulatory and Development Authority (IRDA) Act, 1991 was enacted and the IRDA received the status of a statutory body in 2000 by the Indian Parliament.
Initially, IRDA was set up as an autonomous body headquartered at New Delhi. The headquarters of IRDA was later on shifted to Hyderabad, Telangana in 2001. The Government of India appoints the Chairman and other members of the Insurance Regulatory Development Authority (IRDA).
Earlier, the insurance business in India was under the monopoly of the government and the state owned companies such as Life Insurance Corporation of India, General Insurance Corporation along with its subsidiaries enjoyed the monopoly in the insurance market. Insurance is listed in the union list in the seventh schedule of the constitution. Therefore there was hardly any requirement for a separate regulatory body for the Insurance sector.
However, the insurance regulatory Development Authority Act, 1999 amended the insurance act 1938, Life Insurance Corporation Act, 1956 and the General Insurance Business (Nationalisation) Act, 1972 and the Insurance sector were now opened for the private sector participation.
The responsibilities of IRDA includes making and implementing regulatory rules, guidelines, and classifications along with the developmental and promotional role. IRDA is expected to facilitate the economic growth of the market, protect the interests of policyholders and facilitate a healthy growth of the Insurance sector.
Mission and vision of the Insurance Regulatory Development Authority (IRDA)
- The protection of the interests of policyholders and ensuring fair treatment of the investments of policyholders.
- To speed up the orderly growth of Insurance sector to ensure the benefit of common man and for providing long term funds for increasing the growth rate of Indian economy.
- To ensure the promotion, monitoring, and enforcement of high standards of integrity, competence, financial soundness and fair dealing of those which are regulated by the IRDA.
- To ensure fair, transparent and ordinary conduct in the financial market which deals with insurance services and to build a reliable management information system for enforcing higher standards of financial soundness among the insurance market players.
- To ensure that proper actions are taken in case such standards are inadequate or are enforced ineffectively.
- To promote self regulation in the day today working activities of the insurance industry which are consistent with the prudential regulatory requirements.
Composition of the authority of the Insurance Regulatory Development Authority (IRDA)
The Section 4 of the Insurance Regulatory Development Authority (IRDA) Act, 1999 specifies the composition of authority which consists of 10 member team appointed by the government of India which includes.
- One chairman
- Five whole time members
- Four part time members
Duties powers and functions of the Insurance Regulatory Development Authority (IRDA)
The Insurance Regulatory Development Authority (IRDA) is an autonomous and apex regulatory authority of the Government of India. The section 14 of IRDA Act, 1999 lays down the powers, functions, and duties of the IRDA.
- It has the responsibility and power to issue a certificate of registration to the applicant and renew, modify, withdraw, cancel or suspend any of such registrations.
- To protect the interest of policyholders in matters of assigning the policy, insurable interest, surrender value of the policy, nomination given by the policyholders, settling of the insurance claims and other terms of the insurance contract.
- To specify the required qualifications, practical training and the code of conduct for the intermediaries or the agents and insurance intermediaries.
- To specify the code of conduct for the loss assessors and the surveyors.
- To promote efficiency and effectiveness in the insurance business.
- To promote and regulate the professional organisations which are interconnected with the insurance and reinsurance sectors.
- To levy fees and charges which are essential to carry out the purposes of this IRDA act.
- To call for information from, undertake inspection of, and conduct inquiries and investigations along with the audit of insurers, intermediaries and the organisations connected with the insurance businesses.
- To control and regulate the rates, advantages, terms, and conditions offered by the insurers dealing with the general insurance business not controlled by the Tariff Advisory Committee under section 64U of insurance act, 1938.
- To specify the manner of maintenance of books of account and the statement of accounts rendered by the insurers and the insurance intermediaries.
- To ensure the regulation of financial investment of funds done by the insurance companies.
- To regulate the process of maintaining the margin of solvency.
- To adjudicate the disputes arising between the insurance companies and insurance intermediaries etc.
- To supervise the functioning and working of the Tariff Advisory Committee.
- To specify the percentage of the premium income of the insurer for financing the schemes for the promotion and regulation of professional organisations.
- To specify the percentage of life insurance and general insurance businesses to be undertaken by any insurer in the social sector and rural areas.
- To exercise any other power which may be prescribed.
Assessment of the Insurance Regulatory Development Authority (IRDA)
- IRDA has issued several guidelines and regulations for fulfilling its responsibilities dealing with the Insurance sector.
- It has taken steps such as constituting the investment committee is for all insurers promotion of new businesses such as health insurance which is enhancing in scope and coverage.
- IRDA has taken steps to promote third party evaluators, assessors and surveyors. It has promoted the effective training of insurance personal which includes insurance agents, brokers, and other intermediaries etc.
- IRDA has promoted the introduction and coverage of new kinds of products which are now getting extended to the rural and non traditional sections.
- Recently, the Insurance Regulatory Development Authority (IRDA) has permitted The Life Insurance Corporation of India (LIC) to take 51 shares in the IDBI Bank by relaxing the existing rules for investment. This is a deviation from the existing norms which restricts any insurance company from having stakes beyond fifteen percent in any of the listed financial firms.