The Insurance Regulatory and Development Authority (IRDA) is an autonomous regulatory unit that protects the interests of the policyholder. They supervise the growth of the insurance sector in India as well as maintain a speedy expansion. The IRDA has been formed under the IRDA Act in 1999 with many purposes and responsibilities conferred upon them.
How does IRDA work?
The Insurance Regulatory and Development Authority (IRDA) is an autonomous unit with the only mission towards regulating fair practices in the insurance sector in order to prevent the loss of consumers. The scope of work is broad and IRDA works abiding by its boundary without favoring any single insurance firm.
The main motive of IRDA is:
• Towards protecting policy-holders interest at the time of claims, issuing of the policy, and cancellation of the policy. It supervises that no insurance firm could deny the claim of the policyholders unless it falls beyond the scope of the cover.
• There is a requirement to tame the sector towards a single tune which will bring the players together and then contest with one another based on the discounts. And so, IRDA evidently states the code of conduct for every insurance firm, surveyor, as well as a loss assessor.
• In order to stop any misdeed, it calls for both yearly or need-based audits, carries out an investigation, calls for information from either the insurance firms or intermediaries.
• Regulating the rates and terms offered through the insurance firms to bring equality for the consumers.
• If there is any dispute between the insurer and the policyholder, then IRDA would intervene to provide a resolution.
• Towards preventing different insurers' quote rates according to their convenience, they bound the major perils to the Tariff Advisory Committee. After this, the insurers would consider the percentage of premium income they are required to fund the professional associations.
• Also, for the development of both the urban as well as the rural sector, IRDA sets the insurers with a minimum percentage towards carrying both life and non -life business.
Purpose of IRDA in the Insurance Sector in India
IRDA plays a vital role, which includes-
• To ensure and encourage the systematic growth of the insurance market in order to benefit the individuals who invest in policies to seek safety.
• It protects the interest of the policyholders so that they could trust this system.
• It also promotes higher standards of integrity and fair dealings in the insurance sector.
• Resolve clashes of all kinds and accelerate claim settlement.
• Set standards as well as to conduct vigilance towards checking for scams or frauds.
The roles of the IRDA in the insurance sector:
• IRDA issues a certificate of registration towards the life insurance firm and can also renew, modifies, withdraws, suspends, and cancels the registration
• The regulatory unit secures the policyholder's interests in extents like assigning of policy, nomination through policyholders, insurable interest, settlement of insurance claim, surrender value of the policy as well as additional terms and conditions pertinent to an insurance contract
• It also specifies the essential qualifications, code of conduct, and practical training needed for insurance intermediaries and agents
• IRDA ensures that the code of conduct is followed by surveyors as well as by the loss assessors
• IRDA also promotes efficiency in the conduct of insurance firms
• It promotes and regulates the professional associations connected with the insurance and reinsurance business
• It also levies fees and other charges for running the purposes of the IRDA Act
• IRDA carries out roles like inspection, conducting inquiries as well as investigations which includes an audit of the insurers, insurance intermediaries, and other associations involved with the insurance business
• The rates, advantages, terms, and conditions that might be offered by insurers regarding general insurance business are controlled and supervised by IRDA
• It specifies the form and way in which the books of account shall be maintained and the statement of accounts must be rendered by insurers and insurance intermediaries
• IRDA also keep a check the investment of funds through insurance firms and oversees the maintenance of margin of solvency
• It handles the disputes between insurers and intermediaries or insurance intermediaries
• It oversees the working of the Tariff Advisory Committee
• IRDA stipulates the percentage of premium income of the insurer to finance schemes for encouraging and regulating professional associations
• It stipulates the percentage of life insurance as well as general insurance business to be commenced by the insurer in the rural or social sector
Conclusion
The Indian economy is rising which further encourages the entrance of new insurance players within the market. In order to maintain the pace of growth even-handed, IRDA requires to keep the standards of quality. It would further contribute towards strengthening the financial capacity of a nation as a whole.
With so many roles, the IRDA keeps the standard of the market and takes measures towards eliminating frauds in the insurance industry.
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