Insurance Regulatory and Development Authority of India (IRDAI) regulates the Indian insurance industry to protect the interests of the policyholders and work for the orderly growth of the industry.
The IRDA Act, 1999 spells out the Mission of IRDAI as: “... to protect the interests of the policyholders, to regulate, promote and ensure orderly growth of the insurance industry and for matters connected therewith or incidental thereto......”
Birth of IRDAI
- The Insurance Regulatory and Development Authority (IRDA) was set up as an autonomous body under the IRDA Act, 1999.
- The IRDAI’s mission is to protect the interests of policyholders, to regulate, promote and ensure orderly growth of the insurance industry and for matters connected therewith or incidental thereto.
- 1991: Government of India begins the economic reforms programme and financial sector reforms
- 1993: Committee on Reforms in the Insurance Sector, headed by Mr. R. N. Malhotra, (Retired Governor, Reserve Bank of India) set up to recommend reforms.
- 1994: The Malhotra Committee recommends certain reforms having studied the sector and hearing out the stakeholders
- Some recommended reforms
- 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
- Frames regulations for insurance industry in terms of Section 114A of the Insurance Act, 1938
- From the year 2000 has registered new insurance companies in accordance with regulations
- Monitors insurance sector activities for healthy development of the industry and protection of policyholders’ interests
Functions and Duties of IRDAI
Section 14 of the IRDA Act, 1999 lays down the duties, powers and functions of the IRDAI.
- Registering and regulating insurance companies
- Protecting policyholders’ interests
- Licensing and establishing norms for insurance intermediaries
- Promoting professional organisations in insurance
- Regulating and overseeing premium rates and terms of non-life insurance covers
- Specifying financial reporting norms of insurance companies
- Regulating investment of policyholders’ funds by insurance companies
- Ensuring the maintenance of solvency margin by insurance companies
- Ensuring insurance coverage in rural areas and of vulnerable sections of society