Role of IRDAI

27th September 2022 0 By indiafreenotes

Supervisory Role:

The objective of supervision as stated in the preamble to the IRDAI Act is “to protect the interests of holders of Insurance policies, to regulate, promote and ensure orderly growth of the Insurance industry”, both Insurance and Reinsurance business. The powers and functions of the Authority are laid down in the IRDAI Act, 1999 and Insurance Act, 1938 to enable the Authority to achieve its objectives.

Section 25 of IRDAI Act 1999 provides for establishment of Insurance Advisory Committee which has Representatives from commerce, industry, transport, agriculture, consume for a, surveyors agents, intermediaries, organizations engaged in safety and loss prevention, research bodies and employees’ association in the Insurance sector are represented. All the rules, regulations, guidelines that are applicable to the industry are hosted on the website of the supervisor and are available in the public domain.

Section 14 of the IRDAI Act, 1999 specifies the Duties, Powers and functions of the Authority. These include the following:

  • To grant licenses to (re)Insurance companies and Insurance intermediaries
  • To protect interests of policyholders,
  • To regulate investment of funds by Insurance companies, professional organisations connected with the (re)Insurance business; maintenance of margin of solvency;
  • To call for information from, undertaking inspection of, conducting enquiries and investigations of the entities connected with the Insurance business;
  • To specify requisite qualifications, code of conduct and practical training for intermediary or Insurance intermediaries, agents and surveyors and loss assessors
  • To prescribe form and manner in which books of account shall be maintained and statement of accounts shall be rendered by insurers and other Insurance intermediaries;

Roles of the IRDAI in the insurance sector:

  • IRDAI issues a certificate of registration to the life insurance company and also renews, modifies, withdraws, suspends and cancels the registration.
  • The regulatory body secures policyholder’s interests in areas like assigning of policy, nomination by policyholders, insurable interest, settlement of insurance claim, surrender value of the policy, and other terms and conditions applicable to an insurance contract.
  • It specifies the requisite qualifications, code of conduct and practical training required for insurance intermediaries and agents.
  • IRDAI makes certain that the code of conduct is followed by surveyors and loss assessors.
  • The autonomous body promotes efficiency in the conduct of the insurance business.
  • It also promotes and regulates professional organisations connected with the insurance and reinsurance business.
  • It levies fees and other charges for carrying out the purposes of the IRDAI Act.
  • IRDAI carries out functions like inspection, conducting inquiries and investigations, including an audit of the insurers, insurance intermediaries and other organisations involved with the insurance business.
  • The rates, advantages, terms and conditions that may be offered by insurers with respect to general insurance business are also controlled and regulated by the regulatory body.
  • It also specifies the form and manner in which books of account should be maintained, and the statement of accounts should be rendered by insurers and insurance intermediaries.
  • IRDAI monitors the investment of funds by insurance companies and governs the maintenance of the margin of solvency.
  • It also judges the disputes between insurers and intermediaries or insurance intermediaries.
  • It supervises the functioning of the Tariff Advisory Committee.
  • IRDAI specifies the percentage of premium income of the insurer to finance schemes for promoting and regulating professional organisations referred to in clause (f).
  • It specifies the percentage of life insurance and general insurance business to be undertaken by the insurer in the rural or social sector.