IRDAI is responsible for safeguarding the interests of policyholders, controlling, encouraging, and guaranteeing the insurance industry’s orderly expansion.
The Insurance Regulatory and Development Authority of India (IRDAI) is an autonomous and statutory body. It is responsible for managing and regulating the insurance and reinsurance industry in India.
The Insurance Regulatory and Development Authority of India (IRDAI), which was established by an act of parliament, specifies the composition of the Authority under section 4 of the IRDAI Act of 1999.
History and Establishment of IRDAI
Up until the year 2000, the Indian government oversaw the regulation of the insurance sector.
However, the IRDA was created in 2000 to implement a stand-alone apex body at the advice of the Malhotra Committee report from 1999.
The IRDA started accepting registration requests through invitations in August 2000 and started allowing foreign businesses to invest up to 26% in the market.
Section 114A of the Insurance Act of 1938 has a number of rules and regulations that have been set forth by the IRDA.
Regulations cover everything from safeguarding the rights of policyholders to registering insurance businesses to do business in the nation.
There are currently 34 general insurance companies active in the country, including the ECGC and the Agriculture Insurance Corporation of India, as well as 24 life insurance companies.
The main objective of the Insurance Regulatory and Development Authority of India (IRDAI) is to enforce the provisions of the Insurance Act.
Composition of IRDAI
the Insurance Regulatory and Development Authority of India is constituted by an act of parliament. The Authority is a ten-member body, specified in section 4 of the IRDAI Act of 1999, consisting of
- a Chairman;
- five whole-time members;
- four part-time members;
All of the appointments are done by the Government of India.
Aim of IRDAI
Ensuring fair treatment for policyholders and defending their interests.
To promote the insurance industry’s rapid and orderly expansion (including annuity and superannuation payments), which will benefit the general public, as well as supply long-term finance for the economy’s rapid expansion.
To take action when such standards are not sufficient or are not adequately applied.
To ensure that the industry operates with the appropriate level of self-regulation in accordance with prudential regulation rules.
To establish, encourage, oversee, and uphold high standards for the competence, moral character, and financial stability of those it regulates.
To ensure prompt resolution of legitimate claims, to stop insurance fraud and other wrongdoing, and to set up efficient grievance redressal mechanisms.
To encourage fairness, openness, and lawfulness in financial markets that deal with insurance, and to create a solid management information system to impose strict requirements for the financial soundness of market participants.
Objective of IRDA
The IRDA’s primary goal includes fostering competition to boost consumer choice and lower prices while maintaining the market’s financial stability in order to increase customer satisfaction. The primary objective of the IRDA is:
to safeguard the policyholder’s interests and ensure fair treatment.
to effectively regulate the insurance sector and guarantee its healthy financial standing.
establishing regulations on a regular basis to make sure the sector runs well.
Powers, and Functions of IRDAI
Section 14 of the IRDAI Act, 1999 lays down the duties, powers, and functions of IRDAI.
Issue a certificate of registration to the applicant, renew, alter, withdraw, suspend, or terminate such registration.
Safeguarding the interests of policyholders in matters pertaining to policy assignment, insurable interest, payment of insurance claims, policy surrender value, and other terms and conditions of insurance contracts.
Specifying the necessary credentials, moral standards, and practical training for insurance intermediaries and agents.
Encouraging efficiency in the management of the insurance industry.
Charging fees and other amounts in order to carry out the objectives of this Act.
Governing insurance firms’ financial investments.
Rules governing the preservation of the solvency margin.
Resolution of conflicts involving intermediaries or insurance intermediaries and insurers.
Monitoring the activities of the Tariff Advisory Committee.
Contacting insurers, intermediaries, insurance intermediaries, and other organizations associated with the insurance business to request information, inspect, inquire, and undertake investigations, including audits.
Control and regulation of the rates, benefits, terms, and conditions that insurers may offer in relation to general insurance business if the Tariff Advisory Committee has not done so in accordance with section 64U of the Insurance Act of 1938 (4 of 1938).
IRDAI in Health Insurance Business
The apex authority, the IRDA, is in charge of establishing new regulations and standards for health insurance in the country.
The Insurance Regulatory and Development Authority of India (IRDAI) has been continuously working to lessen the compliance burden of all the regulated organizations as part of its promotion of ease of doing business for insurance companies.
The following are the new IRDA guidelines that the regulator has released for health and mediclaim insurance in 2020:
If the policyholder has renewed the policy for eight years without interruption or lapse, the insurer cannot deny a claim. The moratorium period will be used to refer to this time frame. Except in cases of fraud or when the claim is brought against a policy exclusion, the insurer cannot appeal the denial of the claim to the IRDA.
With the advent of digitization, the medical industry has evolved, and one can now contact a doctor online. The IRDA has requested that insurance companies include telemedicine consultations in their insurance policies.
The insurance provider is responsible for paying interest on the claim amount if the insurer delays the claim. It should guarantee that the claim is settled within 30 to 45 days following the policyholder’s last document submission.
IRDAI on Ease of Living of Senior Citizens
IRDAI has relaxed the requirements for submitting a separate proposal form for taking Immediate Annuity products from National Pension Scheme (NPS) earnings in this direction to make life easier for elderly persons.
In the existing situation, NPS retirees submit an exit form to NPS and a proposal form to insurers at the time of superannuation.
Additionally, in order to encourage the adoption of technology, insurers have been urged to use Adhaar-based authentication for the validation of life certificates, such as Jeevan Pramaan, a Government of India project on biometric-enabled digital services.
The enormous insurance industry is expanding rapidly, at a pace of 15-20%. Insurance services together with banking services boost the nation’s GDP by roughly 7%. The thriving and advanced insurance industry is beneficial for economic growth as it increases the country’s capacity to take risks while providing long-term funding for infrastructure development.
Irdai thus plays a variety of roles. It must first defend the rights of insurance policyholders and make sure they are handled fairly. To make sure that the interests of the average person are not compromised, it must also keep an eye on policy issuers.
Article Written By: Priti Raj
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