Insurance Regulatory and Development Authority

Introduction;

The IRDA Act has established the Insurance Regulatory and Development Authority (“IRDA” or

“Authority”) as a statutory regulator to regulate and promote the insurance industry in India and

to protect the interests of holders of insurance policies. The IRDA Act also carried out a series of

amendments to the Act of 1938 and conferred the powers of the Controller of Insurance on the

IRDA.

Composition of Authority:

The members of the IRDA are appointed by the Central Government from amongst persons of

ability, integrity and standing who have knowledge or experience in life insurance, general

insurance, actuarial science, finance, economics, law, accountancy, administration etc. As per the

section 4 of IRDA Act' 1999, Insurance Regulatory and Development Authority (IRDA, which

was constituted by an act of parliament) specify the composition of Authority and the Authority is

consisting of ten member’s team which are as follows:

a) a Chairman;
b) five whole-time members;
c) four part-time members,

Objectives and Mission of IRDA:

1. To protect the interest of and secure fair treatment to policyholders
2. To bring about speedy and orderly growth
3. To set, promote monitor, and enforce high standards of integrity.
4. To take actions, where standards are inadequate or ineffectively enforced.
5. To ensure speedy settlement of insured claims.

Duties, Powers and Functions of IRDA:

Under the Section 14 of IRDA Act, 1999 lays down the duties, powers and functions of IRDA.
The Authority shall have the duty to regulate, promote and ensure orderly growth of the insurance
business and re-insurance business. The powers and functions of the Authority shall include, -
1. It Issue to the applicant a certificate of registration, renew, modify, withdraw, suspend or
cancel such registration.
2. It protects the interests of the policy holders in various policies, interest and claim related
matter.
3. It specifying requisite qualifications, code of conduct and practical training for intermediary
or insurance intermediaries and agents.
4. It promoting the efficiency in the conduct of insurance business.
5. It imposes fees and other charges for carrying out the purposes of this Act.
6. It control and regulate the rates, advantages, terms and conditions that may be offered by
insurers in respect of general insurance business.
7. It specifying the types and manner in which books of account shall be maintained and
statement of accounts shall be rendered by insurers and other insurance intermediaries;
8. It regulates investment of funds by insurance companies.
9. It regulates the maintenance of margin of solvency.
10. It plays an important role to settlement of disputes between insurers and insurance
intermediaries.
11. It specifies the percentage of premium income of the insurer to finance schemes for promoting
and regulating professional organisations.
India is the important emerging insurance markets in the world. Life insurance will grow very
rapidly over the next decades in India. The major drivers include sound economic fundamentals,
a rising middle-income class, an improving regulatory framework and rising risk awareness. The
fundamental regulatory changes in the insurance sector in 1999 were significant for future growth.
Despite the restriction of 26% on foreign ownership, large foreign insurers were entered
the Indian market. State owned insurance companies still have dominant market positions. But,
this would probably change over the next decade.