IRDAI Explained: Regulating India’s Insurance Sector
by Yuvi K - December 16, 2023
What is IRDAI?
Insurance Regulatory and Development Authority of India (IRDAI) is an autonomous, statutorily constituted regulatory body that regulates and develops the insurance sector for India. It was established in April 1999 by the Government of India and empowered through the Insurance Regulatory and Development Authority Act, 1999. IRDAI functions with the purpose of protecting the interests of policyholders, claimants and intermediaries of the insurance sector.
Role of IRDAI in India
IRDAI is mandated to supervise and regulate the insurance sector in India. This includes setting and enforcing requirements on minimum standards of services rendered by the insurance companies and policyholders. The regulator also ensures that the policyholders get prompt and equitable settlement of their claims. IRDAI is also responsible for approval of insurance products, registration of insurance companies, health service providers, agents, intermediaries, surveyors and loss adjusters.
Insurance products brought under IRDAI
IRDAI has brought a wide range of insurance products under its purview which includes life, general, health and Chit funds insurance. Under life insurance, IRDAI regulated products range from term life, endowment, annuity, whole life, unit-linked, joint-life and pension plans. Under general insurance, the regulated products range from motor third party insurance, maritime, fire and other specialised products. Health insurance products like family floater, individual, group, student and senior citizen policies are also regulated by IRDAI. Chit funds insurance is also under IRDAI control.
Regulations & Rules
Apart from approving the insurance products, IRDAI has laid out several regulations and rules which the insurance companies must comply with. Insurance companies are required to maintain a minimum capital surplus requirement, submit periodic returns, adhere to the solvency margins and comply with the Code of Corporate Governance. IRDAI has also set up a toll-free customer service help-desk for insurance policyholders, which policyholders can approach in case of doubt or grievances relating to their policies.
Impact of IRDAI on the Insurance Sector
IRDAI has made a significant impact on the Indian insurance sector by introducing product diversification and innovation in the sector. This has helped the sector witness growth in terms of turnover, premium collection and policyholder protection. IRDAI has also promoted coverage of the rural population and increased the penetration of insurance across various population segments. This has enabled marginalised and underprivileged individuals to benefit from various insurance products. IRDAI has also enabled greater transparency and better governance of insurance companies through its enhanced supervision and monitoring of the sector.
Conclusion
IRDAI has played an important role in the growth and development of the Indian insurance sector by enforcing regulations, laying down standards and approving products. It has enabled the underprivileged and the rural population to benefit from various insurance products and increased the insurance penetration across different population segments. IRDAI has also increased the transparency and governance of the insurance sector through its enhanced supervision and monitoring.
