Insurance Regulatory

Framework
Overview
Main reasons for Insurance Regulation
IRDAI
• Insurance Regulatory and Development Authority of India (IRDAI), is a
statutory body formed under an Act of Parliament, i.e., Insurance
Regulatory and Development Authority Act, 1999 (IRDAI Act 1999) for
overall supervision and development of the Insurance sector in India.

• The powers and functions of the Authority are laid down in the IRDAI Act,
1999 and Insurance Act, 1938. The key objectives of the IRDAI include
promotion of competition so as to enhance customer satisfaction through
increased consumer choice and fair premiums, while ensuring the financial
security of the Insurance market.
• 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.

• The main reason for government regulation within insurance can be said
to be for consumer protection.
• The IRDA Act provides a complete regulation of the insurance
sector in India. A committee was established by the
Government of India to examine the structure of the
insurance sector and to advocate revisions to the rules and
regulations to make it more effective and efficient.

• IRDA has the authority to grant certificates of registration to

new insurance companies who wish to operate in India.
• Insurance Regulatory and Development Authority
has brought a significant changes in Insurance
sector and thus due to its measures there has
been seen a tremendous growth in the insurance
sector. Prior to Insurance Regulatory and
Development Authority only Life Insurance
Corporation (LIC) & General Insurance Company
(GIC) were the players in Insurance sector,
however due to the establishment of IRDA, new
players emerged in the field of insurance. And
also Insurance Regulatory and Development
Authority deal with any kind of discrepancy or
difference in the insurance sector.
 The Objective of IRDA:

• The primary objective of the Insurance Regulatory

and Development Authority is to implement the
provisions under the Insurance Act. The mission
statement of IRDA is:
– To safeguard the interest of policyholder and ensure
his/her fair treatment
– To govern the insurance industry impartially and to
make sure the financial sanity of the industry remains
intact
– To routinely formulate regulations to ensure the
insurance industry functions without any uncertainty.
 Entities regulated by IRDAI
a. Life Insurance Companies - Both public and private sector
Companies
b. General Insurance Companies - Both public and private sector
Companies. Among them, there are some standalone Health
Insurance Companies which offer health Insurance policies.
c. Re-Insurance Companies
d. Agency Channel
e. Intermediaries which include the following:
• Corporate Agents
• Brokers
• Third Party Administrators
• Surveyors and Loss Assessors.
• Thus, IRDAI is an abbreviation which stands
for the Insurance Regulatory and
Development Authority of India. It is an
authority that acts as a regulatory board for
the insurance industry in India and supervises
the functioning of Life Insurance as well as
General Insurance companies which are
operating in the country.
• IRDAI has set various rules and regulations for the
operation of the insurance industry. Its sole
objective is to defend the interest of the
policyholders and grow and evolve the insurance
industry as a whole. IRDAI regularly issues notice
to insurance companies in case there are any
changes in the rules and regulations. It leads the
insurance companies to foster efficiency in the
conduct of insurance business and control the
rates or any other charges related to insurance.
 What is an Insurance Ombudsman?

• You must approach your insurance company for any query or distress with regards
to your policy. However, if you feel your issue is not resolved, you can approach
the Insurance Ombudsman which plays the role of grievance redressal forum for
policyholders.
• Insurance Ombudsman is a scheme launched by the Central Government for
impartial, efficient and cost-effectively settlement of grievances of a policyholder.
You can employ Insurance Ombudsman in case of:
• Claim settlement delay
• Dispute over insurance premium
• Total or partial rejection of the claim by the insurance company
• Conflict over policy terms and conditions
• Disputes over the legal aspects of policy
• Disputes related to policy services
• Any breach of rules or regulation of the Insurance Act, 1938
• You can lodge a complaint in writing duly signed by the complainant or by
employing any legal heirs or nominees. You can lodge the complaint either in
person or via email/post/fax along with a hard copy.
 Here are the roles IRDA plays in the Indian Insurance Sector:

• Protecting the interest of the policyholder

• Assist in advancing the growth of the insurance
industry in an organised manner for the benefit of
the common man
• Grant, renew, revoke, modify or suspend the
registration certificate of an insurance company
• Safeguard policyholder in matters concerning the
grant of policies, settlement of a claim, selection
of a nominee by the policyholder, surrender policy
value and other such terms and conditions of the
policy
• Provide long-term funds to accelerate the nation’s economy
• Enforce high standards of integrity and competence among
policy providers
• Ensure genuine claims are settled efficiently
• Prevent malpractices and policy frauds by providing a
grievance redressal forum for policyholders
• Promote fairness and transparency of insurance in financial
markets
• To build a reliable management system in order to ensure
high standards are maintained and financial stability is
observed by the policy providers
• Take appropriate actions when high standards are not
maintained
• To ensure an optimal level of self-regulatory is maintained
in the insurance industry