ROLE OF REGULATORY

AUTHORITY IN INSURANCE
INDUSTRY

Vinayak Raj Sinha 24

Priyanka Battoo 32
Regulator and its Function
Why do we need
Regulator??
 IRDA
In april 1993, the government of India appointed a committee of
Reforms in insurance sector with Shri. R.N. Malhotra, a former
governor of Reserve Bank Government of India in January 1994.In
accordance with the recommendations of the committee, the
government set up a regulatory body known as (Insurance Regulatory
and Development Authority" and enacted the Act known as Insurance
Regulatory and Development Act, 1999

Mission: Insurance Regulatory & Development Authority (IRDA) is

regulatory and development authority under Government of India in
order to protect the interests of the policyholders and to regulate,
promote and ensure orderly growth of the insurance industry.
Objectives Of IRDA
PROTECTION
 PROMOTION
* Provide a favorable climate for product
development/intermediation and healthy growth of
insurance
- A reliable and stable market
- Freedom of entrepreneurial
spirit
* Balance between degree of prudential regulation and
degree of freedom
COMPETITIVE
NEUTRALITY
JUDICIARY
SOURCES OF REGULATIONS

* Laws / Statutes - Government

* Formal Regulations - Regulations

O Non-formal Regulations - Guidelines

O Self-regulation - Industry
O Internal Regulation - Corporate
Governance
PFRDA
Role of PFRDA
Overlapping Products
RBI
SEBI
Role of self- regulation in
insurance
 CHALLENGING ENVIRONMENT
Convergence of
Institutions,
,
Instruments,
Regulatory Mission, Intermediaries
Competition, Disintermediation
International Benchmarks, and
Reintermediation

Growing Changing
customer awareness,
Insurance Pricing scenario /
expectations Industry De-tariffing

Rapid rate of
technology Increasing Product-Price
advancements Complexity and Flexibility,
& innovation New Business ART, Derivatives
Models
 Major Challenge
O De-tariffing : Because of de-tariffing , there
is increased competition in the industry.
Because this, competition has increased and
profit margin are coming down.
Suggestion
Just as RBI has introduced the concept of base
rate, IRDA could also give this base rate
below which discount on policies are not
given
 CONCLUSION
RBI,SEBI,IRDA,PFRDA all have different domain
areas of their specialization and control. But despite
of this they have number of overlapping functions.
In financial markets , they need to work hand –in-
hand

In order manage concept of super regulator is

proposed and it is under consideration.

Government of India should facilitate and develop the

platform where all regulators could work together
on common grounds and formulate the policies in
best interest of the country.