See discussions, stats, and author profiles for this publication at: https://www.researchgate.

net/publication/337160188

IRDAI -A Regulator Of Insurance Business

Article · March 2019

DOI: 10.32622/ijrat.73201905

CITATIONS READS

4 841

2 authors, including:

Surya .M
Alagappa University
5 PUBLICATIONS 31 CITATIONS

SEE PROFILE

All content following this page was uploaded by Surya .M on 05 March 2020.

The user has requested enhancement of the downloaded file.

 International Journal of Research in Advent Technology, Vol.7, No.3, March 2019
E-ISSN: 2321-9637
Available online at www.ijrat.org

IRDAI – A Regulator Of Insurance Business

*M.Surya, **Dr.B.Sudha
Ph.D. (Full time scholar), Associate Professor
Department of Commerce, Department of Banking Management,
Alagappa University, Karaikudi.

Abstract- The Insurance Regulatory and Development Authority of India (IRDAI) is independent and supreme
body that governs and supervises the Insurance business in India. Its key responsibility is to protect the rights of
policyholders. The IRDAI is extending support to the delegates of developing/ less developed countries in the
form of providing technical inputs based on their requirement, with an objective to improve and enhance their
knowledge on various aspects of Insurance.In order to create awareness, this paper tries to state a detailed
explanation about IRDAI’ssupervisory role, including its functions, duties and responsibilities. It also describes
the organisational structure and functioning of IRDAI.

Keywords: IRDAI, Statutory Body, Ombudsman, Tariff Advisory Committee, Insurers

1. INTRODUCTION
A well-developed and evolved insurance sector is a The IRDAI has been extending support to the
boon for economic development as it provides long- delegates of developing/ less developed countries in
term funds for infrastructure development at the same the form of providing technical inputs based on their
time strengthening the risk taking ability of the requirement, with an objective to improve and
country. Insurance sector was deregulated in 1999 enhance their knowledge on various aspects of
with the way of Insurance Regulatory and Insurance.
Development Authority Bill in December 1999. Prior
to the deregulation era there were six firms, namely, Objectives Of The Study
Life Insurance Corporation, National Insurance The main objectives of the present study are:
Company Ltd., the New India Assurance Company 1. To study the supervisory role of the IRDAI.
Ltd., the Oriental Insurance Company Ltd and the 2. To know the organisational structure and
United India Insurance Company Ltd and General operational activities of IRDAI.
Insurance Corporation catering to insurance needs of
the country. After deregulation, 53 players, 2. METHODOLOGY
comprising 6 public and 47 private are in the fray. The study entitled “IRDAI- A Regulator of Insurance
Two legislations govern the insurance sector: The Business” is based on secondary data. The sources of
Insurance Act 1938 and Insurance Regulatory and data were collected from annual reports of the IRDA,
Development Authority Act 1999. Under the current articles and related websites.
guidelines there is 49% equity cap for foreign partners
in an insurance company. IRDAI established by IRDAI
IRDAI Act 1999, with a view to promote the interest  To protect the interest of and secure fair
of policyholders. It started functioning on 19 April treatment to policyholders;
2000 with one chairperson, four full time members  To bring about speedy and orderly growth of
and two part time members. the insurance industry (including annuity and
The Insurance Regulatory and Development superannuation payments), for the benefit of
Authority of India (IRDAI) wasorganized as an the common man, and to provide long term
autonomous body to regulate and develop the Indian funds for accelerating growth of the
Insurance industry. The IRDA was incorporated as a economy;
statutory body in April, 2000 following the opening of  To set, promote, monitor and enforce high
the Insurance sector for private participation. The key standards of integrity, financial soundness,
objectives of the IRDA include promotion of fair dealing and competence of those it
Insurance sector and also to enhance customer regulates;
satisfaction through increased consumer choice, while  To ensure speedy settlement of genuine
ensuring the financial security of the Insurance claims, to prevent insurance frauds and other
market. malpractices and put in place effective
grievance redressal machinery;

922
 International Journal of Research in Advent Technology, Vol.7, No.3, March 2019
E-ISSN: 2321-9637
Available online at www.ijrat.org

 To promote fairness, transparency and statement of accounts shall be rendered by

orderly conduct in financial markets dealing insurers and other insurance intermediaries;
with insurance and build a reliable  Regulating investment of funds by insurance
management information system to enforce companies; regulating maintenance of
high standards of financial soundness margin of solvency;
amongst market players;  Adjudication of arguments between insurers
 To take action where such standards are and intermediaries or insurance
inadequate or ineffectively enforced; intermediaries;
 To bring about optimum amount of self-  Administering the functioning of the tariff
regulation in day-to-day working of the advisory committee;
industry consistent with the requirements of  Specifying the percentage of premium
prudential regulation. income of the insurer to finance schemes for
promoting and regulating professional
3. SUPERVISORY ROLE OF IRDAI organizations referred to in clause (f);
According to Section 14 of IRDAI Act, 1999 lays  Stating the percentage of life insurance
down the duties, powers and functions of IRDAI. business and general insurance business to be
Issue to the provisions of this Act and any other law undertaken by the insurer in the rural or
for the time being in force, the Authority shall have social sector;
the duty to regulate, promote and ensure orderly  And exercises any other powers as may be
growth of the insurance business and re-insurance prescribed.
business.IRDAI as a regulator includes the following
powers and functions such as: 4. ORGANISATIONAL STRUCTURE OF
 Regulation, promotion and ensuring orderly IRDAI
growth of the insurance business and re- Composition of IRDAI
insurance business; As per the section 4 of IRDAI Act' 1999, Insurance
 Issuance to the applicant a certificate of Regulatory and Development Authority of
registration, renew, modify, withdraw, India (IRDAI, which was constituted by an act of
suspend or cancel such registration; parliament) specify the structure of Authority, who
 Protection of the interests of the policy are appointed by the Government of India. It is a ten
holders; memberteamconsisting of;
 Specifying mandatoryqualifications,code of a) a Chairman;
conduct and practical training for b) five whole-time members;
intermediary or insurance intermediaries and c) four part-time members,
agents;
 Specifying the code of conduct for surveyors Irdia’s Head Office And Regional Offices
and loss assessors; IRDAI’s Head Office is at Hyderabad that carries all
 Promoting efficiency in the conduct of the major activities of IRDAI including ensuring
insurance industry; financial stability of insurers and observing market
 Promoting and regulating professional conduct of various regulated entities.
institutes connected with the insurance and IRDAI’s Regional Offices are at New Delhi &
re-insurance business; Mumbai. The Regional Office, New Delhi focuses on
 Imposing fees and other charges for carrying spreading consumer awareness and handling of
out the purposes of this act; Insurance grievances besides providing required
 Calling for information from, undertaking support for inspection of Insurance companies and
inspection of, conducting enquiries and other regulated units located in the Northern Region.
investigations including audit of the insurers, This office is functionally liable for licensing of
intermediaries, insurance intermediaries and Surveyors and Loss Assessors. Regional Office at
other organisations connected with the Mumbai handles similar activities, as in Regional
insurance sector; Office Delhi, pertaining to Western Region.
 Control and regulation of the rates, returns,
terms and conditions that may be offered by Entities Regulated By Irdai
1. Life Insurance Companies - Both public
insurers in respect of general insurance
and private sector Companies
business not so controlled and regulated by
2. General Insurance Companies - Both
the tariff advisory committee under section
public and private sector Companies which
64u of the insurance act, 1938 (4 of 1938);
consists of some standalone Health Insurance
 Specifying the form and manner in which
books of account shall be maintained and

923
 International Journal of Research in Advent Technology, Vol.7, No.3, March 2019
E-ISSN: 2321-9637
Available online at www.ijrat.org

Companies offering health Insurance

policies.
3. Re-Insurance Companies
4. Agency Channel
5. Intermediaries which include the following:
 Corporate Agents
 Brokers
 Third Party Administrators
 Surveyors and Loss Assessors.

Registered Insurers In India

TABLE 3. REGISTERED INSURERS
Type of Public Private Total
Insurer sector sector
Life 1 23 24
General 6 21 27
Health 0 6 6
Re-insurers 1 10 11
(including
Foreign
Reinsurers
Branches/
Lloyd's Figure-1. Functioning of Insurance Regulatory and
India) Development authority of India
Total 8 60 68
Source: IRDAI Annual report 2017-18 5. SELF-REGULATORY BODIES
Tariff Advisory Committee:
At the end of March 2018, there are 68 insurers The Tariff Advisory Committee is a body corporate,
operating in India; of which 24 are life insurers, 27 which controls and regulates the rates, advantages,
are general insurers, 6 are Standalone health insurers terms and conditions presented by insurers in the
entirely doing health insurance business and 11 are re- general insurance business. The Advisory Committee
insurers including foreign re-insurers branches and has the right to require any insurer to supply such
Lloyd’s India. Of the 68 insurers presently in information or statements necessary for discharge of
operation, eight are in the public sector and the its functions.
remaining sixty are in the private sector. Two Insurance Association of India, Councils and
specialized insurers, namely ECGC and AIC, one life Committees:
insurer namely LIC of India (LIC), four in general All insurers and provident societies incorporated or
insurance and one in reinsurance namely GIC Re. are domiciled in India are members of the Insurance
in public sector. 23 life insurers, 21 general insurers, 6 Association of India and if it is elsewhere other than
standalone health insurers and 10 reinsurers including in India are associate members of the Insurance
foreign reinsurers’ branches and Lloyd’s India are in Association. There are two councils of the Insurance
private sector. It is determined that since the Association, namely the Life Insurance Council and
establishment of the IRDA the no. of life and non-life the General Insurance Council.
insurance insurers registered have been increasing and The Life Insurance Council, through its Executive
started their business in insurance arena. Most of the Committee, conducts examinations for individuals
private players in the Indian insurance industry are a wishing to qualify themselves as insurance agents. It
joint venture between a dominant Indian company and also fixes the limits for actual expenses by which the
foreign insurers. insurer carrying on life insurance business or any
group of insurers can exceed from the prescribed
limits under the Insurance Act. Likewise, the General
Insurance Council, through its Executive Committee,
may fix the limits by which the actual expenses of
management incurred by an insurer carrying on
general insurance business may exceed the limits as
prescribed in the Insurance Act.
Insurance Ombudsman:

924
 International Journal of Research in Advent Technology, Vol.7, No.3, March 2019
E-ISSN: 2321-9637
Available online at www.ijrat.org

The Ombudsman are appointed in accordance with

the Redressal of Public Grievances Rules, 1998 to
tenacity all complaints relating to settlement of claims
on the part of insurance companies in a cost effective,
efficient and effective manner. Any individual who
has a grievance against an insurer may make a
complaint to an Ombudsman within his jurisdiction,
in the manner specified.
Department of Financial Services
The Department of Financial Services (DFS)
supervises several key programs/initiatives and
reforms of the Government concerning the Banking
Sector, the Insurance Sector and the Pension Sector in
India. Initiatives and reforms relating to Financial
Inclusion, Social Security, and Insurance as a Risk
Transfer mechanism; Credit Flow to the key sectors of
the economy/ farmers/ common man are some of the
key focus areas being dealt by the Department.

6. CONCLUSION
The growth Performance of the insurance business
has been increased tremendously since the
establishment of IRDA in India, which supervise and
controlled the entire insurance industry. This authority
has more functions to play in the insurance sector,
which has insurance advisory committeeslikeTariff
Advisory Committee, Department Of Financial
Services, Ombudsman and Insurance Association of
India. The no. of registered life insurer and non-life
insurer has been increasing from one and half decades
after the establishment of IRDAI. The private sector
insurers have shown more significant development
than public sector.

REFERENCE
[1] www.irdai.gov.in
[2] https://financialservices.gov.in/insurance-
divisions/Insurance-Regulatory-&-Development-
Authority
[3] PrakashP.J,.”Role of Insurance Regulatory and
Development Authority in Indian Insurance
Sector: A Study”, International Journal of
Academic Research, Vol.2, Issue-2(3), April-
June, 2015.
[4] Rangit Singh, “Insurance sector regulation a
study of the insurance regulatory and
development authority of India”, Punjab
University, 2015.

925

View publication stats