If you ever have researched or read about insurance, you will have definitely heard of the term ‘IRDAI’. All most people know about that is a large government organization. However, IRDAI is the topmost authority on everything insurance in the country. The word ‘IRDAI’ is an abbreviation for the name Insurance Regulatory and Development Authority of India. The organization serves as the regulator of the guidelines and operations of the insurance industry in India. It oversees the companies offering life insurance and general insurance to ensure that they practice within the given rules and regulations. To answer what is general insurance, everything-insurance, other than life is categorised under this term. All of this is done to make sure that insurance companies can offer insurance products freely while protecting the interests of a customer. Here is everything you need to know about the IRDAI:
What is the Insurance Regulatory and Development Authority of India (IRDAI)?
The Insurance Regulatory and Development Authority of India is the sole supervisory body that watches over every part of the insurance sector in India. It has designed a set of rules and regulations that ensure smooth functioning of the insurance industry while avoiding any malpractices or exploitation. The main focus of the policy is to protect policyholders from any unfair practices that may happen in the insurance industry. At the same time, it is also responsible for the growth of the industry itself.
The organization regularly issues communications to insurance companies to advise them in case there are any changes in the rules and regulations. It guides the insurance industry towards being more efficient in their operations, pricing, service etc. You can visit the official website of IRDAI for further details.
Establishment of IRDAI
Until the year 2000, different parts of The Government of India collaborated to regulate the sale and management of the insurance products in the country. However, there was a need for a standalone and singular body to govern everything related to insurance. Hence, the IRDAI was found in 2000 due to the advice of the Malhotra Committee report in 1999. In the month of August 2000, the IRDAI opened its doors for registrations through the means of invites. The means that insurance providers would have to officially need IRDAI’s approval to sell insurance. This also allowed companies from other countries to invest into the Indian market.
The rules and regulations that IRDAI has outlined for insurance practices in India come under Section 114A of the Insurance Act, 1938. Regulations can be related to the registration of insurance companies for conducting operations in the country or related to consumer protection against mal practices or exploitation. There are more than 30 General Insurance companies and 25 Life Insurance companies currently registered with the IRDAI. You can visit the official website of IRDAI for further details.
Functions of IRDAI in the Indian insurance sector
Here are the important functions of IRDA:
- Protect the interest of the policyholder.
- Help in speeding up the insurance industry’s growth of the insurance industry in an orderly fashion, for the benefit of the common man.
- To provide long-term funds to speed up the nation’s economy.
- To promote, set, enforce and monitor high standards of integrity, fair dealing, financial soundness and competence of the insurance providers.
- To ensure genuine claims are settled faster and efficiently.
- To prevent malpractices and fraud, the IRDA has set up a grievance redress forum to ensure the policyholder is protected.
- To promote transparency, fairness and systematic conduct of insurance in the financial markets.
- To build a dependable management system to make sure high standards of financial stability are followed by insurers.
- To take adequate action where such high standards are not maintained.
- To ensure the optimum amount of self-regulation of the industry.
You can visit the official website of IRDAI for further details.
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