IRDA : Meaning, Establishment, Structure, Functions and Objectives, types of Insurance

Many of you hear and aware about the term “IRDA”. It is an abbreviation of the Insurance Regulatory And Development Authority. The authority regulates the insurance business in India and supervises the operation of the country’s life and general insurance companies. The IRDA’s major goal is to defend policyholder interest while also regulating the insurance business.
Insurance regulatory development authority is an autonomous and statutory body tasked with regulating and promoting the insurance and re-insurance industries in India. It was constituted by the Insurance regulatory and development authority act, 1999 in act of parliament passed by the govt. of India. The agency’s headquarters are in Hyderabad, Telangana where it moved from Delhi in 2001.

Until 2000, the insurance business was regulated by the Indian government. Following the suggestion of the Malhotra Committee report in 1999, The IRDA was founded in 2000 as a stand-alone apex body. The IRDA began accepting registration applications through invites in august 2000, allowing corporations from foreign nations to invest up to 26% in the market.
Under section 144 A of the Insurance Act of 1938, the IRDA has established a number of rules and regulations. The regulations cover everything from registering insurance business to protecting policyholder’s interest. The IRDA now has 31 general insurance firms and 24 life insurance firms registered as of September 2020.

Section 4 of Insurance regulatory development authority of Indian 1999 act specifies the authority’s composition. It is a body consisting 10 members, one of among is chairman, 5 full time and 4 part time members appointed by the government of India. At present 1 September 2019, the authority chaired by Subhash C. Khuntia and its full time members are P.J. Joseph, Nilesh sathe, Purnima Gupta, Praveen krtumbe, Sujay Banarji.

There are various functions and role of IRDA which are as following:-

  • Issuing, renewing, modifying, withdrawing, suspending or cancelling registration.
  • Protecting policyholder interest.
  • Specifying qualifications, code of conduct, training for intermediaries and agents.
  • Specifying the code of conduct for surveyors and loss asserters.
  • Promoting efficiency in the conduct of Insurance business.
  • Promoting and regulating professional organization connected with the insurance and re-insurance industry.
  • Levying fees and other charges
  • Regulating a margin of solvency
  • Inspecting and investigating insurers, intermediaries and others relevant organization.
  • Regulates rates, terms and conditions
  • Specifying how account books should be kept.
  • Regulating companies’ investment and funds.
  • Adjudicate disputed between insurers and intermediaries.
  • Supervising the tariff advisory committee.
  • Promote professional organization
  • Maintain books of accounting and auditing.

The objective of IRDA of India is to enforce the provisions comes under the Insurance act. The statement of the IRDA is:-

  • To safeguard the policyholder’s interest and ensure that they are treated fairly.
  • To ensure the financial soundness of the insurance business by regulating it fairly.
  • Regularly establish regulations to guarantee that the industry works in a clear and unambiguous manner.

Following are the salient features of the apex body, the insurance regulatory and development authority of India:-

  • Acts as an insurance sector regulator.
  • The policyholder’s interest are safeguarded.
  • The apex body establishes rules and regulations under section 144 A of the insurance Act of 1938.
  • The insurance act entrusts it with issuing certificates of registration to new insurance businesses seeking to operate in India.
  • Oversees the activities of the insurance industry in order to ensure that insurers and policyholder’s continue to grow

Insurance is mainly divided into life and Non-life Insurance. These are further classified into other types of insurance. These are the types of insurance regulated by the IRDA:-
1.) Life insurance:

  • Terms plans
  • Endowment policies
  • Unit-linked insurance policies.
  • Retirement policies.
  • Money-back policies.
    2.) General insurance:
  • Health insurance policies.
  • Vehicle motor insurance policy;
    a. Car insurance
    b. Bike insurance.
  • Property insurance policies
  • Travel insurance plans
  • Gadget insurance plans.

1.) The IRDA regulates the insurance industry. On the other side SEBI regulates the securities and commodity industry.
2.) The IRDA established in 1999. On the other side SEBI established in 1992.
3.) The IRDA protects the interest of insurance policyholders, on the other side SEBI protects the interests of investor in securities.
4.) The IRDA grant certificate of registration to insurance companies to issue insurance policies, on the other side SEBI grant certificate of registration to stockbrokers, bankers, sub brokers, to issue deeds.
5.) The IRDA makes rules and regulations under the Insurance Regulatory and Development Authority Act, on the other side SEBI make rules and regulations under the Securities and Exchange Board of India Act.

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