IRDAI: Understand its Full Form, Goals and Role

IRDAI’s full form is Insurance Regulatory and Development Authority of India. It is the statutory body that is responsible for regulating and supervising the insurance sector in India. IRDAI protects the interests of policyholders and ensures the growth of the insurance industry. It registers insurance companies and issues insurance licenses to them.

IRDAI: Historical Background

IRDAI was established as a statutory body in April 2000. It was constituted by the Insurance Regulatory and Development Authority Act 1999, an Act of Parliament passed by the Government of India. Originally, the IRDAI’s headquarter was in New Delhi. However, in 2001, IRDAI’s headquarter was moved to Hyderabad.

Membership Structure of IRDAI

IRDAI is a 10-member body. It includes a Chairman, Five Full-Time Members and Four Part-Time Members. The members of IRDAI are appointed by the Government of India.

The insurance regulator also has an Insurance Advisory Committee (IAC) that advises on regulations and other affairs. IAC has no more than 25 members at any given point in time. Its members include representatives from commerce, industry, transport, agriculture and consumers among others. 

Types of Insurance that IRDAI Regulates 

IRDAI oversees and regulates two types of insurance, namely, life insurance and non-life insurance a.k.a general insurance:

• Life insurance: This insurance governs policies providing a sum of money to the policyholder’s family or loved ones if they pass away. Some life insurance policies also provide money if the policyholder becomes disabled.

• Non-Life/General insurance: This insurance covers policies that aren’t considered life insurance policies. Some non-life insurance policies are health insurance, travel insurance, motor insurance, home insurance and jewellery insurance.

Goals of IRDAI

IRDAI oversees the development of the insurance industry and upholds the rights and interests of policyholders. Accordingly, the goals of IRDAI are:

• To ensure fair practices by insurance companies in the insurance market.

• To regulate the insurance sector’s growth and development.

• To improve transparency for policyholders dealing with insurance companies.

• To prevent and reduce malpractices and frauds related to insurance.

• To enhance speediness of claim settlement.

• To secure both consumers and insurers.

• To issue guidelines that align with the interests of policyholders.

Role of IRDAI

The role and responsibilities of the Insurance Regulatory and Development Authority of India include the following:

• IRDAI regulates the insurance terms and rates offered by insurance companies.

• It resolves disputes that arise between policyholders and insurers.

• IRDAI protects policyholder claims, insurance issuance, and policy termination. Additionally, it ensures that no insurance provider can disregard customers' will.

• To avoid any kind of misleads, IRDAI carries out investigations and requests yearly audits.

• To prevent different insurers from quoting rates based on their convenience, IRDAI enlists the Tariff Advisory Committee to handle large risks.

• To keep life and non-life insurance balanced, the Insurance Regulatory and Development Authority of India requires insurers to maintain a minimum percentage of business in rural areas and social sectors. 

• It promotes technological innovation in the insurance sector.

• It stabilizes the insurance market by establishing clear rules and guidelines. 

• The Insurance Regulatory and Development Authority of India prevents various insurance companies from quoting rates arbitrarily based on their personal convenience by bringing major concerns before the Tariff Advisory Committee.

Summary

IRDAI stands for Insurance Regulatory and Development Authority. It is a statutory body that was established in 2000 under IRDA Act 1999 to regulate and supervise the insurance sector. Initially based in New Delhi, its headquarters moved to Hyderabad in 2001. The main objective of IRDAI is to protect the interests of policyholders, ensure transparency and promote growth of the insurance industry. The authority consists of 10 members. It also has an Insurance Advisory Committee that consists of up to 25 members from various sectors. 

IRDAI plays an essential role in registering insurance intermediaries, resolving disputes between insured individuals/entities and insurers, and stabilizing the insurance market through clear guidelines.

If you want to obtain an IRDAI license from Insurance Regulatory and Development Authority of India to start an insurance company, connect with Registrationwala for assistance in the IRDAI application process.