Let's discuss more the IRDAI in detail:
1.0 Origin / History of IRDAI:
The presence of Insurance in India goes way back in time. The emergence of the Insurance business started way back in 1818 when the first insurance company. i.e., Oriental Life Insurance Company started its operations in Calcutta. Since then Insurance business has grown in multi-folds.
Pic Credits: IRDAI
Let's discuss the history of IRDAI:
- In 1993, the Indian Government formed a committee under the chairmanship of RN Malhotra (former Governor of RBI) to recommend reforms in the insurance sector.
- In 1999 Government, following the suggestions of the Malhotra Committee report, formed an autonomous body the Insurance Regulatory and Development Authority of India to regulate and develop the insurance market of India.
- In April 2000, The IRDAI was incorporated as a statutory body.
- As of today, there are 24 life insurance companies and 31 general insurance companies including the ECGC and Agriculture Insurance Corporation of India present in India.
2.0 Chairman of IRDAI:
As per Section 4 of IRDAI Act 1999, IRDAI has 10 members on its board consisting of the following:
- A Chairman
- Five whole-time members
- Four part-time members
Note: All are Selected by GOI
Pic Credit: IRDAI
3.0 Headquarters of IRDAI:
- IRDAI has its head office in Hyderabad, India.
- IRDAI also has two regional offices in Mumbai and Delhi.
4.0 Objective of IRDAI:
As per the IRDAI Act 1999, the main objectives of the IRDAI include the promotion of competition so as to enhance customer satisfaction through increased consumer choice and lower premiums while ensuring the financial security of the insurance market.
Other objectives of IRDAI is as follows:
- The IRDAI is responsible for protecting the interest of policyholders at the same time securing their fair treatment by the issuers.
- IRDAI brings about rapid and systematic growth of the insurance industry and provides long-term funds for accelerating the growth of the economy.
- IRDAI makes sure the quick and hassle-free settlement of genuine claims.
- It also strives to prevent insurance frauds and other malpractices and put in place effective grievance redressal machinery.
- IRDAI is responsible to promote fairness, transparency, and orderly conduct in financial markets dealing with insurance.
- IRDAI penalizes whoever disobeys the rules and regulations.
- IRDAI promotes, monitors, and enforces high standards of uprightness, fiscal soundness, fair dealing, and competence of those it regulates.
5.0 Functions and Power of IRDAI:
IRDAI draws its power from section 14 of the IRDAI Act, 1999.
Following are the functions and powers of IRDAI.
- IRDAI works to promote efficiency in the conduct of the insurance business.
- IRDAI can issue, renew, modify, withdraw, suspend or cancel the license of insurance providers.
- It protects the concern of the policyholder in matters such as nomination by policyholders, insurable interest, settlement of insurance claim, etc.
- It specifies the code of conduct for surveyors and loss assessors.
- It also specifies necessary qualifications, code of conduct, and practical training for intermediary or insurance intermediaries and agents.
- IRDAI issues the directions about how books of account should be maintained and the statement of accounts should be rendered by insurers and other insurance intermediaries
- IT regulates the investment of funds by insurance companies and maintenance of margin of solvency.
- It performs the adjudication of disputes between insurers and intermediaries or insurance intermediaries
- To promote the insurance business in rural areas, IRDAI defines the percentage of life insurance business and general insurance business to be undertaken by the insurer in the rural or social sector.
- IRDAI levies fees and other charges for malpractice and disobeying the rules and regulations.
This is all about the insurance regulatory of India. For more articles like this please stay tuned with us.
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