What is IRDA?
IRDA stands for Insurance Regulatory and Development Authority. It is an autonomous body ie self-governing or independent or subject to its own laws as well as a statutory body ie it derives its power from a law statute made by Parliament. IRDA came into existence in 1999 by the IRDA Act on the recommendation of the Malhotra Committee but was incorporated as a statutory body in the year 2000.Its headquarter is in Hyderabad ,Telangana with two regional branches in New Delhi and Mumbai. Its main objective is to ensure the financial stability of the insurance market and promote competition to enhance customer satisfaction by providing varieties in fair premium and consumer choices. Presently it is headed by Subhash Chandra Khuntia.
IRDA Composition and Entities It Regulates
IRDA has ten members all appointed by the Government Of India which includes:
- A chairman
- Five whole time members
- Four part time members
IRDA also regulates some entities such as:
1.LIC both private and public sector
2.General Insurance Companies both public and private
4.Intermediaries which consist of corporate agents,brokers,third party administrators,surveyors etc
5. Agency channel
Functions of IRDA
IRDA has a variety of roles to play. It’s all power and functions are laid down in the IRDA Act 1999 and Insurance Act 1938.Through its prudential approach, it not only intervenes in the insurance sector but also monitors risk by asking the insurers to submit financial statements on the annual accounts,reports on asset-liabilities management.To protect the interests of low income people it issues MicroInsurance regulation.Besides the above responsibilities some other functions of the IRDA are-
1.IRDA grants license to the Insurance Companies and intermediaries regarding renewal, modification ,registration etc.
2.It promotes and regulates organizations connected with the insurance and re-insurance sector.
3.It keeps a check on the maintenance of the margin of solvency which means the inherent risk that the respective line of business poses to the insurer.
4.Regulation of investment of funds by insurance companies.
5.Supervising the working of the Tariff Advisory Committee.
6.Policyholders’ interests protection related to the nomination of the policyholder, settlement of insurance claim etc.
7.Settlement of disputes between insurers and intermediaries through its effective grievance redressal machinery ie insurance ombudsman. Presently there are 17 insurance ombudsmen across the country.
8.Deciding the percentage of premium income of the insurer to finance schemes.
9.Determining the percentage of life insurance business and general insurance business undertaken in the rural/social sector.
10.Conducting inspection,calling for information and keeping an eye on the working of the insurance companies.
IRDA also has some mission statements which it follows with full devotion and dedication for the growth and prosperity of the insurance sector. Some of them are-
1.It makes sure that speedy and orderly growth of the insurance industry takes place for the benefit of the common man.
2.It provides long term funds for accelerating the country’s economic growth.
3.Prevents insurance frauds and speedy settlement of genuine claims.
4.Enforce and promote high standards of integrity,financial soundness, fair dealing.
5.Building a reliable management information system to have a high standard of financial soundness among market players.
6. Promoting fair, transparent and orderly conduct in financial markets.
IRDA is a very competent authority that continuously works for the growth and development of the insurance sector thus strengthening the risk-taking ability of the country.It also extends support to the less developed /developing countries by providing technical inputs based on their needs thus marking a strong presence of India abroad. In short IRDA through its competitiveness and smart marketing strategies is not leaving any stone unturned to protect the interests of its consumers thus paying the way forward for country prosperity because a healthy insured prosperous citizen will lead to a developed nation.
And Many More…