Insurance Regulatory and Development Authority
Encyclopedia
The Insurance Regulatory and Development Authority (IRDA) is a national agency of the Government of India
, based in Hyderabad. It was formed by an act of Indian Parliament known as IRDA Act 1999, which was amended in 2002 to incorporate some emerging requirements. Mission of IRDA as stated in the act is "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."
In 2010, the Government of India
ruled that the Unit Linked Insurance Plan
s (ULIPs) will be governed by IRDA, and not the market regulator Securities and Exchange Board of India
.
Full force and utility of various institutions like Advisory Committee and self-regulatory organizations are not yet realized as the regulator seems to be in a long learning mode. Due to over delegations, Individual incumbents decide the pace and extent of utilization of prudential and statutory bodies. Research is limited to opinion seeking through legacy channels. Market waits for revision of insurance act and establishment meaningfully functioning regulatory organs devoid of excess delegation and subjective localization of development agencies.
IRDA Journal is available as soft copy in its website. Unlike other Indian administrative Regulatory Agencies IRDA is perceived as a silent regulator with activities confined to its local existence.
Government of India
The Government of India, officially known as the Union Government, and also known as the Central Government, was established by the Constitution of India, and is the governing authority of the union of 28 states and seven union territories, collectively called the Republic of India...
, based in Hyderabad. It was formed by an act of Indian Parliament known as IRDA Act 1999, which was amended in 2002 to incorporate some emerging requirements. Mission of IRDA as stated in the act is "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."
In 2010, the Government of India
Government of India
The Government of India, officially known as the Union Government, and also known as the Central Government, was established by the Constitution of India, and is the governing authority of the union of 28 states and seven union territories, collectively called the Republic of India...
ruled that the Unit Linked Insurance Plan
Unit Linked Insurance Plan
A unit-linked insurance plan is a type of life insurance where the cash value of a policy varies according to the current net asset value of the underlying investment assets. It allows protection and flexibility in investment, which are not present in other types of life insurance such as whole...
s (ULIPs) will be governed by IRDA, and not the market regulator Securities and Exchange Board of India
Securities and Exchange Board of India
The Securities and Exchange Board of India is the regulator for the securities market in India.-History:It was formed officially by the Government of India in 1992 with SEBI Act 1992 being passed by the Indian Parliament...
.
Expectations
The law of India has following expectations from IRDA:- To protect the interest of and secure fair treatment to policyholders.
- To bring about speedy and orderly growth of the insurance industry (including AnnuityAnnuityAnnuity may refer to:* Annuity : any terminating stream of fixed payments over a specified period of time* Life annuity: a financial contract providing payments for a person's lifetime* Annuity...
and Superannuation payments), for the benefit of the common man, and to provide long term funds for accelerating growth of the economy. - To set, promote, monitor and enforce high standards of integrity, financial soundness, fair dealing and competence of those it regulates.
- To ensure that insurance customers receive precise, clear and correct information about products and services and make them aware of their responsibilities and duties in this regard.
- To ensure speedy settlement of genuine claims, to prevent insurance frauds and other malpractices and put in place effective grievance redressal machinery.
- To promote fairness, transparency and orderly conduct in Financial marketFinancial marketIn economics, a financial market is a mechanism that allows people and entities to buy and sell financial securities , commodities , and other fungible items of value at low transaction costs and at prices that reflect supply and demand.Both general markets and...
s dealing with insurance and build a reliable management information system to enforce high standards of financial soundness amongst market players. - To take action where such standards are inadequate or ineffectively enforced.
- To bring about optimum amount of Self-regulationSelf-regulationThe term self-regulation can signify:*Autoregulation*Homeostasis, in systems theory*Self-control, in sociology / psychology*Self-regulated learning, in educational psychology*Self-regulation theory , a system of conscious personal health management...
in day to day working of the industry consistent with the requirements of prudential regulation.
Duties,Powers and Functions of IRDA
Section 14 of IRDA Act, 1999 laysdown the duties,powers and functions of IRDA:- Subject to the provisions of this Act and any other law for the time being in force, the Authority shall have the duty to regulate, promote and ensure orderly growth of the insurance business and re-insurance business.
- Without prejudice to the generality of the provisions contained in sub-section (1), the powers and functions of the Authority shall include,
- issue to the applicant a certificate of registration, renew, modify, withdraw, suspend or cancel such registration;
- protection of the interests of the policy holders in matters concerning assigning of policy, nomination by policy holders, insurable interest, settlement of Insurance claim, surrender value of policy and other terms and conditions of contracts of insurance;
- specifying requisite qualifications, code of conduct and practical training for intermediary or insurance intermediaries and agents;
- specifying the code of conduct for surveyors and loss assessors;
- promoting efficiency in the conduct of insurance business;
- promoting and regulating professional organisations connected with the insurance and re-insurance business;
- levying fees and other charges for carrying out the purposes of this Act;
- calling for information from, undertaking inspection of, conducting enquiries and investigations including audit of the insurers, intermediaries, insurance intermediaries and other organisations connected with the insurance business;
- control and regulation of the rates, advantages, terms and conditions that may be offered by insurers in respect of general insurance business not so controlled and regulated by the Tariff Advisory Committee under section 64U of the Insurance Act, 1938 (4 of 1938);
- specifying the form and manner in which books of account shall be maintained and statement of accounts shall be rendered by insurers and other insurance intermediaries;
- regulating investment of funds by insurance companies;
- regulating maintenance of margin of solvency;
- adjudication of disputes between insurers and intermediaries or insurance intermediaries;
- supervising the functioning of the Tariff Advisory Committee;
- specifying the percentage of premium income of the insurer to finance schemes for promoting and regulating professional organisations referred to in clause (f);
- specifying the percentage of life insurance business and general insurance business to be undertaken by the insurer in the rural or social sector; and
- exercising such other powers as may be prescribed from time to time,
Advisory committee
IRDA consists of a Chairman and some permanent as well as part time members. The regulations, however, are enacted under the guidance of a statutory advisory committee. The advisory committee consists of following individuals and ex-officio authorities:- Chairman: Hari Narayan J. is the current Chairman of IRDA.
- Full-time Members: Currently, they are Mr M. Ramaprasad (Nonlife Member), Sri G Prabhakara (Life Member), Dr R Kannan(Member, Actuary) and Sri R.K. Nair (Member, F & I). There is provision for a panel of other members and part time members. IRDA formed a high powered Insurance Law Reforms Committee known as KPN Committee with important insurance advisors like Mr N Govardhan and Dr K C Mishra as its members. There were also a few non-advisory committee members like Mr Liaquat Khan and Mr T Viswanathan etc.
Full force and utility of various institutions like Advisory Committee and self-regulatory organizations are not yet realized as the regulator seems to be in a long learning mode. Due to over delegations, Individual incumbents decide the pace and extent of utilization of prudential and statutory bodies. Research is limited to opinion seeking through legacy channels. Market waits for revision of insurance act and establishment meaningfully functioning regulatory organs devoid of excess delegation and subjective localization of development agencies.
IRDA Journal is available as soft copy in its website. Unlike other Indian administrative Regulatory Agencies IRDA is perceived as a silent regulator with activities confined to its local existence.