IRDAI or fully recognized as the Insurance Regulatory Development and Authority of India is an independent, autonomous and statutory body working under the government of India. The main role of the organization is to regulate, develop and promote the insurance and reinsurance sector in India while safeguarding the interest of policyholders.
All the private and public insurance companies have to get certification from IRDAI. The insurance companies dealing in either life or general insurance is required to get a certification of authentication from Insurance Regulatory Development and Authority of India in order to operate legally. The IRDAI has the power of renewal, modification, withdrawal, suspension or cancellation of this certificate of registration.
Constitutional Establishment of IRDAI
IRDAI Act was formulated as per the recommendations of Malhotra Committee report (7 Jan 1994), operated by Mr. R.N. Malhotra (Retired Governor, RBI) and Insurance Regulatory Development and Authority of India was incorporated on April, 2000 with the purpose of regulating and promoting the insurance sector in India. The main objectives recognized in the Insurance Regulatory Development and Authority act were:
Entry of the private sector in the Insurance sector
Raising foreign investment in Insurance Sector
Ensure Financial Security and Independence of the insurance sector in India
To enhance customer satisfaction and consumer choice
Working Objectives of IRDAI
This ten-membered organization has few fundamental work objectives that its members have to comply at any cost. The main objectives of Insurance Regulatory Development and Authority of India include:
To safeguard and promote the rights of the policyholders.
To regulate, develop and promote the insurance sector.
To quickly settle insurance claims to minimise frauds and malpractices
To bring out transparency in the insurance sector
Dynamic Functions of IRDAI
The functions and duties of Insurance Regulatory Development and Authority of India are mapped out according to the Section 14 of IRDAI Act,1999. As per the act, its main functions are:
Registration – To issue a certification of registration to the insurance companies. Every company before entering into the insurance business requires certification from Insurance Regulatory Development and Authority of India. Which it can revoke or cancel at any moment.
Safeguard Consumer Interest – Its main role is to promote the interest of the policyholders. So, that insurance company won’t exploit the rights of their clients. IRDAI regulates the policies regarding insurance to safeguard the interest of policyholders.
Certification to Intermediaries – IRDAI issues certificates to intermediaries like insurance agents and brokers, after evaluating their qualification and code of conduct. It also provides training to intermediaries. No individual can sell an insurance policy without IRDAI certification.
Regulate Insurance Companies – The working of insurance companies is regulated by IRDA to promote efficiency. It is responsible for regulating rates, premiums, terms and conditions which may be offered by insurers, specifying how accounts are to be maintained, resolving disputes, levying fees etc.
Audit Accounts. IRDA issues the guidelines for the insurance companies and brokers regarding the maintenance of policyholders account. It also manages the investment of policyholder’s funds by insurance companies.
So, in short, IRDA is an organization that regulates the insurance market by protecting the rights of both insurance companies and policyholders.