What are the functions of IRDA?
Insurance Regulatory & Development Authority, also called IRDA, is the supreme authority that authorizes the functioning of insurance business in India. It was established by the IRDA Act, 1999. The primary purpose of IRDA is to safeguard the interests of the policyholders and also to ensure the growth of insurance in the country. Various roles and functions of IRDA have been discussed in this article.
Objectives of IRDA
IRDA aims to:
- Carry forward the interests of the policyholders;
- Uphold the development of the Insurance Sector;
- Ensure quick resolution of claims;
- Prevent frauds and malpractices;
- Ensure fair conduct in the financial market when dealing with the insurance.
Significance of IRDA Functions
IRDA being an autonomous apex statutory body, regulates and develops the insurance sector in India. Insurance in India dates back to 1850 with the General Insurance Organization built up in Calcutta. Since then, there emerged various players in this market. Each organization rehearsed business on its own rates and rules. It made clients’ unreliable, which brought into question the validity of the insurance. With time the administration understood this reality and subsequently set up an autonomous administrative body called IRDA. After that, new requests came out, and the market was overflowed with insurance products.
Functions of IRDA
According to Section 14 of the IRDA Act 1999, the authority must ensure the regulation, development and the promotion of the insurance business. Some of the essential functions of IRDA are as follows:
- To provide applicant with the registration certificate, renewal, modification, withdrawal, suspension or cancellation of such registration;
- To protect the policyholders’ interests in case of assigning and nominating policy holders, understanding insurance claims, insurable interests, surrendering the value of the policy and other terms and conditions of the insurance contract.
- To mention required qualifications, code of conduct and practical training for intermediary/insurance intermediaries and agents.
- To explain the code of conduct applicable to the surveyors as well as to assessors.
- Ensure the efficiency and proficiency of the conduct of the insurance business.
- To encourage as well as regulate the relationship of professional organizations and the insurance and reinsurance businesses.
- To levy the charge in order to carry out the purpose of the Act.
- To call for information, undertaking inspection, conducting enquiries and investigations, including the audit of insurers, intermediaries, insurance intermediaries and other organizations connected with the insurance business.
- To regulate & control the rates, benefits, terms and conditions offered to the insurer pertaining to general insurance business not controlled and regulated by the Tariff Advisory Committee under Section 64U of the Insurance Act 1938.
- To specify the way in which the books should be maintained and the manner in which the statement of accounts is to be rendered by insurers and other insurance companies.
- To maintain the investment funds by the insurance companies.
- Regulation of the maintenance of margin solvency.
- To decide the disputes among the insurers and the intermediaries of insurance intermediaries.
- To administer the functioning of the tariff advisory committee.
- Setting down of the percentage premium income of the insurer of the finance schemes to promote and regulate the professional organizations.
- To safeguard the interests of the policyholders in case of assigning and nomination of policyholders.
- Setting out the percentage of life insurance business and general insurance business to be taken ahead by the insurer in the rural or social sector.
- To regulate the insurance industry in a way that ensures financial soundness of the applicable laws and regulations.
- To periodically frame laws to remove any scope of ambiguity in the insurance sector.
- To take action where the appropriate standards are inadequate or not enforced effectively.
- To grant, modify or suspend license for insurance companies.
- To perform such other functions of IRDA as may be prescribed.
These are some of the critical roles that IRDA oversees. With the Indian economy attracting insurance players, we may see a passage of new insurance players in the market. Here the IRDA will have a special role to play. In order to keep the pace of development, the functions of IRDA should be performed accurately enough to provide every player with a fair deal and also to make sure that the customers also have a variety of plans to choose from.
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