The insurance industry of India is a huge market with several major players. So it becomes important that there is an authority overseeing the industry. And this is where the Insurance Regulatory and Development Authority of India (IRDAI) comes in. Let us learn more about them.
Insurance Regulatory and Development Authority of India (IRDAI)
The IRDAI is an independent and autonomous statutory body. The IRDAI was constituted under the Insurance Regulatory and Development Authority Act which was passed in 1999. The main function of the IRDAI is to regulate the insurance industry of the country.
For many years the insurance sector of India was protected. The IRDA Act of 1999 allowed the entry of private companies in the insurance sector. It also allowed for 26% investment by foreign companies. Since 2014 the FDI limit has been increased to 49% and further opened up the insurance sector.
So the Insurance Regulatory and Development Authority of India has a role to protect the policyholders from any form of discriminatory practices. They regulate all the insurance companies. All companies have to approach the IRDAI for registration certificates. And they are responsible for the renewal, modification or cancellation of these certificates.
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Functions and Powers of the IRDAI
The IRDA Act gives the authority its functions and powers. Section 14 of the Act contains the scope of powers of the Insurance Regulatory and Development Authority of India to regulate the insurance and reinsurance industry. Let us take a look at the powers and functions of the IRDAI
The IRDAI has the authority to issue registration certificates to any applicant. The also may re-issue, renew, cancel or modify these certificates as per their discretion.
- Protection of the policyholders in matters such as assigning of policy, nominating members to the policy, insurable interest, settlement of claims, and any other such matters
- Make guidelines and provide training for the appropriate code of conduct for insurance agents and intermediaries
- Also making the code of conduct for loss assessors and surveyors working with the insurance companies.
- They can also conduct investigations and audits of insurance companies, intermediaries, and any other organizations with a connection to the insurance business
- Regulation of rates, terms, and conditions, etc. that the insurers offer their customers in the general insurance business
- The IRDAI can also dictate the manner in which the insurance companies have to maintain their records and books of accounts. And how they prepare their final accounts as well.
- They regulate how the insurance companies invest their funds and maintain their margin of solvency
- The adjudication of matters and disputes of any kind involving the insurance companies or intermediaries is also done by the IRDAI
- There is a Tariff Advisory Committee with relation to the insurance company. The IRDAI regulates its functions as well.
Role of IRDAI as a Business Facilitator
One function of the Insurance Regulatory and Development Authority of India is that it also acts as a business facilitator. It regulates the insurance industry and creates trust and goodwill in the market for these insurance companies.
The IRDAI is also responsible for the growth and development of the insurance sector. The increasing participation of foreign companies under the watchful eye of the authority is good for both the insurance sector and the economy as a whole.
Solved Question on IRDAI
Q: The IRDAI helps with the marketing of the insurance sector. True or False?
Ans: This statement is True. The Insurance Regulatory and Development Authority of India is also responsible for spreading knowledge and awareness about the benefits of insurance to the general public. Making them aware of the benefits and educating them about the other facets of insurance is a huge boost to the industry.