Currently, there are twenty-four Insurance companies in India, but how do you know which company offers you the best service as per your convenience? So, IRDA introduced the solution to...
The insurance sector has contributed a large part in the growth of an Indian economy. A well-structured insurance domain elevates the risk-taking ability of a nation which furthers strengthens the economy as a whole. The insurance policies safeguard a business, person or assets from uncertain misfortunes. It provides a layer of protection in the unforeseen situation of loss-causing incidents. Government constituted a statutory body called IRDA (Insurance Regulatory and Development Authority) in 1999 to monitor the Insurance industry. This write-up depicts IRDA’s role in the progress of Insurance sector.
A Peek into the History of Insurance sector
The insurance companies got nationalized during the Pre-liberalization period of India. The sole objective was to protect the interest of policyholders. Therefore, two state-owned insurance companies were formed, namely, the Life Insurance Corporation (1956) and the General Insurance Corporation (1972) for non-life insurance. However, Post-liberalization, Insurance industry starts enlarging at an extensive scale.
Consequently, it results in the establishment of Insurance Regulatory and Development Authority that aims to oversee the functions of insurance companies. It outreached the insurance industry to the private players who further collaborated with the foreign players.
The impact of Pre-liberalization and Post-liberalization rapidly increased the number of insurance companies. It led to a dynamic Insurance sector which offers ample affordable services to the consumer.
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Current picture of Insurance industry after IRDA took over
Presently, there are 57 insurance companies in India wherein 46 belong to the Private sector. Moreover, there are 33 non-life and 24 life insurance companies. The overall market size of Insurance sector can reach up to $280 billion in 2020.
IRDA has set a standard format for all insurance companies to maintain transparent dealing and help customers in the most efficient manner.
Fundamental functions and duties of IRDA
Section 14 of IRDA Act, 1999 clearly defines the powers, functions and duties of IRDA. IRDA is an autonomous body which is subject to supervise and promote even growth of the insurance and reinsurance companies. Here is the list of functions that the Insurance Regulatory and Development Authority perform:
- Issue a certificate of insurance registration, renewal, modification, withdrawal, suspension or cancel such registration of an applicant.
- IRDA protects the interests of policyholders in regards to the matters of an insurable interest, assigning policy, settlement of the insurance claim, surrender value of a policy, nominations by policyholders and other terms & conditions of insurance contracts.
- The regulatory body also specifies the guidelines for required qualifications, practical training and code of conduct for insurance intermediaries like web aggregators, insurance agents, brokers etc.
- Specifying the code of conduct for loss assessors, insurance companies and surveyors.
- Another responsibility of IRDA is to promote efficiency in the conduct of an insurance business operation.
- Further, it regulates professional organizations associated with the business of an insurance and re-insurance.
- IRDA prescribes the fees and additional charges to carry out the purposes of IRDA Act.
- Insurance Regulatory and Development Authority calls for information from and undertakes inspection of insurance companies. It investigates insurers, intermediaries and other organizations to validate the information.
- IRDA is subject to regulate the investment of funds by insurance companies and ensures to maintain the margin of solvency.
- IRDA has the authority to specify the form, manner to maintain the financial books and statement of accounts that shall be offered by insurers and insurance intermediaries.
- Adjudication of disputes amidst insurers and insurance intermediaries.
- It controls the rates, terms & conditions and advantages that may be rendered by an insurer. IRDA regulates the function of Tariff Advisory Committee as well that falls under section 64U of Insurance Act.
Types of insurance policies provided under IRDA
IRDA role in the growth of an Insurance sector
IRDA plays a significant part in the steady development of the insurance industry. It consistently encourages insurance providers to offer the best services to the people seeking insurance policies. Insurance Regulatory and Development Authority of India promotes high standards of fair dealings and integrity in the market. The authority also conducts surveillance to check for frauds or scam cases. Thus, it resolves all kind of disputes and accelerates claim settlement.
IRDA has taken considerable measures to support Insurance industry. There has been a phenomenal growth in an insurance arena which also improves state of the Indian economy. IRDA emphasizes on investor-friendly insurance policies by enabling various tax exemptions on different insurance policies.
The regulatory body of IRDA is also spreading awareness about the benefits of taking insurance policies through its consumer education section on its official website.
In case you want to know about the latest provision under IRDA Act, contact Swarit Advisors. We can also help you to obtain a Web Aggregator License as well as Insurance Broker License.