As there are so many insurance companies in India performing insurance business, it is necessary to oversee the policies provided to the policyholders by the insurers. For this very purpose, an autonomous and statutory body has been formed in India to protect the interests of the insured. This regulatory body is known as IRDA, i.e., Insurance Regulatory and Development Authority.
The Parliament of India starts this body in the year 2000 under the IRDAI Act 1999. IRDA became an independent, statutory, and apex body after the Insurance Laws were declared formally on 26th December 2014 by Mr. Pranab Mukerjee, the then President of India.
IRDA is a body consisting of ten members, namely, One Chairman, Five full-time members, and four part-time members. And all these members and the Chairman take an appointment by the Indian Government.
Insurance Regulatory and Development Authority (IRDA) has a huge responsibility to regulate and promote the orderly growth of the insurance policies provided to the insured.
Now we will thoroughly understand the bases of this great building named IRDA, by going through its comprehensive details.
Importance of IRDA :
- It is the esteemed body that holds responsibilities in the growth and development of the Insurance Sector by the rights of the policyholders.
- It takes responsibility for registering and regulating the insurance companies.
- Also held responsible for specifying qualifications and code of conduct for insurance intermediaries.
- It also has to oversee terms of non-life insurance covers and premium rates.
- The Insurance Regulatory and Development Authority has a radical effect on the insurance market. IRDA regulates the insurance market.
- IRDA impacts over the protection of policyholders. It claims to provide fair treatment to all the policyholders so that they become trustworthy among the bulk of society.
Power of IRDA in the Insurance Sector :
- IRDA has the power of providing licenses to insurance intermediaries after setting norms for them.
- It has the power to ensure the policyholders that the insurance company will maintain Solvency Margin properly. (Solvency Margin is the ability of a company to pay out for the insured’s claims.)
- It also has the power to impose fines on insurance companies who are famous for any violation such as selling policies through non-authorization insurance selling websites and doing excess payment to Corporate agents and brokers.
- IRDA aims to protect the interest of the policyholders in the case of surrendering value of the policy, settlement of insurance claims, nomination by policyholders, insurable interest, etc.
- It gives the Certificate of Registration to the applicant. It can also renew, withdraw, modify, suspend, and cancel the registration of the applicant.
- Has the power to state the qualifications, set norms, and practical training for the intermediaries such as brokers and insurance agents.
- It also states the code of conduct for loss assessors and surveyors.
- Has the control to ensure efficiency in the conduct of the business of insurance.
- It imposes fees and charges for carrying the purpose of the IRDAI Act.
- IRDA has the power to call for information, audit, conduct investigation and inquiry of the insurance intermediaries, insurers and organizations related to the business of insurance.
- It also controls and regulates the rates, gains terms, and conditions to the insured by the insurers with respect to the general insurance business.
- It has got the legacy to regulate the investment of funds by the insurance companies.
- Works for dispute resolution between the insurers and insurance intermediaries such as agents and brokers.
- It controls the working of the Tariff Advisory Committee.
- Has the ability to recline on the percentage of premium income of the insurer so that it can fund the schemes for promoting and regulating the professional organizations.
- It can also recline on the percentage of life insurance and general insurance business carries by the insurer in the rural and social sector.
Roles and Objectives of IRDA :
- Its role is to promote the rights and interests of the insured.
- It’s objective is to ensure the growth of the Insurance business.
- To upgrade speedy settlement of genuine claims of the policyholders.
- To degrade any discrepancy and frauds in the policies offered to the policyholders.
- Establish orderly conduct and transparency in financial markets.
- To encourage systematic growth and development of the insurance industry so that it becomes beneficial for the common man.
- To certify lucidity, exactness, and pellucidity while trading with the insurance policyholders.
- Set, advance, assist, monitor, and administer high standards of integrity, financial activity, fair dealing, and capability for the insurance policies regulate by them.
- IRDA claims that factual details are provided to the insured about the products and services of the policy.
Duties and Functions of IRDA :
- The registration certificates to insurance companies are issued and regulated by IRDA.
- The premium rates supervise by them.
- The insurance cover terms also issues by them.
- Its function is to regulate the professional organizations which are related to the insurance business.
- Its work is to check insurance scams and other misconducts related to insurance policies.
- It takes appropriate steps against situations where the standards set by them are not prevailing or inappropriately enforce.
- It accomplishes the excellent volume of self-regulation in everyday activities of the industry are sincere with the obligations of prudential regulation.
Thus, the Insurance Regulatory and Development Authority is an authority that helps in increasing the economic growth of the country. There are many insurance companies that come under this authority liable to follow the norms set by IRDA.
So profound is the effect of IRDA in the modern life of insurance business, that it is inconceivable to imagine our economy without it. Not only has it contributed to our economic growth, but it has also helped in the field of employment. In fact, it has proved to be an effective department for the spread of knowledge, trust among people and has also contributed vastly to improve the quality of the services provided by the insurance companies.