The IRDAI, which is an insurance regulator and development authority, is governed primarily by the Insurance Act of 1938, in conjunction with the 1999 Act. Some of the functions of IRDA are regulating insurance and reinsurance businesses, issuing licenses, protecting policyholders’ interests, specifying qualifications and codes of conduct for intermediaries and agents, and monitoring insurers’ rates, terms, and conditions. Additionally, IRDAI supervises professional organisations connected to the insurance and reinsurance sectors, maintains solvency margins and oversees the adjudication of disputes while also overseeing the Tariff Advisory Committee. IRDAI’s multifaceted functions are pivotal in maintaining a robust and ethical insurance industry in India. To know more about the details of the functions of IRDA, continue reading this blog till the end.
Governing Laws for IRDA in India?
The IRDAI, which is an insurance regulator and development authority, was established by a parliamentary law called the Insurance Regulatory and Development Act of 1999. This law has a total of 32 sections, six chapters and three schedules. This law of 1999 gives various powers and functions to IRDA, which will help the authority to look after the insurance industry. It is not the only law which were allotted these functions. The primary law that has all the powers with respect to the insurance industry is the Insurance Act of 1938. This is the principal law. In short, we can say that both the act of 1938 and 1999 are the key governing laws of the Insurance Regulatory and Development Authority of India.
Key Functions of IRDA
There are various powers and functions of IRDA which have been prescribed under section 14, chapter 4 of the Insurance Regulatory and Development Act of 1999. Some of the key powers and functions of IRDA are mentioned below:
- Regulate the insurance businesses in India
- Promotes businesses related to insurance in India
- Ensure orderly growth with respect to the insurance business
- It also regulates and promotes the re-insurance businesses
- Ensure orderly growth with respect to the re-insurance business
- Issue the Insurance Web Aggregators License to the applicant after proper verification
- Renewal of the certificate of Insurance Web Aggregator License
- Any kind of modification in the License
- Withdrawal of the license also comes under its ambit
- Suspension or cancellation of the IWA license
- It is one of the functions of IRDA to protect the interest of the policyholders with respect to the assigning policy, settlement of the claim, choosing the right policy, etc.
- Specify the requirement of the qualification of the intermediaries and the agents.
- Ensure that the code of conduct has been followed and is not being violated in any form.
- Ensure that practical training has been provided to the intermediary as well as the agents.
- Surveyors and loss assessors must be specified with respect to the code of conduct.
- Efficiency must be promoted in the business of insurance
- Promote the professional organisations which are connected with the insurance as well as reinsurance businesses
- Regulation of the professional organisations which are directly or indirectly connected with the insurance and reinsurance businesses
- Levy the fees as well as other charges which are prescribed under the law to achieve the goal of the IRDA Act
- Check whether the organisations are working within the scope of the law or not
- Check the internal functioning of the organisation as well as connected organisations. Internal functioning includes audits of the company, legal and financial compliances, etc.
- It is also one of the functions of IRDA to control and regulate the rates offered by the insurers.
- Also, it needs to check the terms and conditions offered by the insurers
- There are certain advantages offered by the insurers, but IRDA also needs to control and regulate them
- Must specify the form in which the statement of accounts and books of accounts will be maintained by the insurer
- Also, IRDA needs to prescribe the manner in which statements of accounts and books of accounts will be maintained by the insurer
- It needs to maintain the margin of solvency and investment of funds of the insurance company
- It needs to do to adjudication of the disputes
- Must supervise the functioning of the Tariff Advisory Committee
Key Advantages of the Insurance Regulatory and Development Authority
Some of the key benefits, or we can say advantages, of the Insurance Regulatory and Development Authority of India are mentioned below:
- Easy and smooth running of the insurance industry
- Provides safe and clean industry to individuals
- Helps in getting the best insurance policies
- Maintain the functioning of the insurance businesses
- Ensures the insurance business is complying with the applicable laws
- Time-to-time inspection of the functioning of the insurance businesses
- Protects the rights of the individuals who want to obtain the insurance policies
- Maintain the code of conduct
- Provides honest comparison of the various policies to the individuals so that they can choose the best amount for all
- Limits the Insurance Web Aggregators so that they cannot do something illegal
- Ensures that all the Insurance Web Aggregators are working as per the rules and regulations
Conclusion
In the era of digitalisation, almost everything has become digitalised, so how can the insurance industry remain behind in this race. Nowadays, hundreds of insurance policies are available, which give a number of choices to individuals so that he or she can choose the best one for themselves. These policies and related things are governed by the Insurance Act of 1938. It has established an authority known as the Insurance Regulator and Development Authority, which looks after the insurance industry in India. One of the most important functions of IRDA is to provide security to the individuals who are opting for the insurance policy online. If you are related to the insurance industry directly or indirectly, you must be aware of the above functions of IRDA as well as their government’s laws because this will help you to survive in this industry for the long term.
