The Indian insurance industry is estimated at around US$ 14.62 billion in FY 2022. Regulating such a large market requires a standalone government body. This is where IRDAI comes into the picture. If you are new to the insurance market, you may wonder what is IRDAI and what are its functions. To satiate your curiosity, here is everything you need to know about the IRDAI.
What is IRDAI in insurance?
IRDAI stands for Insurance Regulatory and Development Authority of India. Think of IRDAI as the SEBI or the RBI of the insurance sector. It is appointed by the government of India, and its duty is to overlook and regulate the insurance market of India. The IRDAI is responsible for safeguarding the interest of policyholders by supervising all types of insurance policies that are sold in the country. This includes life insurance, health insurance, general insurance, and motor insurance policies among many others.
IRDAI is sometimes referred to as IRDA.
What are the functions of the IRDAI?
The IRDAI has the following functions in the insurance industry:
To protect the interests of the policyholders
The main function of the IRDAI is to overlook the functioning of the insurance industry in the country and ensure that policyholders do not fall prey to malpractices and frauds. The IRDAI has also set up grievance redress forums that help to protect the interest of the policyholder. As per the law, the insurance companies are encouraged to practice transparency, fairness, and systematic conduct in their business operations by the IRDAI. Furthermore, it is also the function of the IRDAI to ensure that genuine claims are settled swiftly.
To help the policyholders get the right assistance, the IRDAI also dictates the qualifications that an insurance agent, loss assessor, or intermediatory is required to have before engaging with customers. Being the apex body for the regulation of the insurance industry, the IRDAI has the authority to grant, renew, modify, suspend, cancel, or withdraw registration certificates of all Indian insurance companies. Here you may wonder, what is IRDA certification? The IRDA certificate is granted to new insurance companies in India before they begin their business operations.
To promote the growth of the insurance industry in India
Apart from regulating the insurance industry, IRDA is also responsible for the growth of the said industry. Consequently, IRDA regulates the terms and conditions, charges, and benefits that are offered by Indian general insurance companies. The government has also given authority to IRDA to act against the insurance market players who do not follow the high standards that are dictated by the IRDA. For the development of the urban and rural areas, IRDA is responsible for setting the minimum percentage limit of insurance business that provide general and life insurance policies in the said areas.
To ensure the apt amount of self–regulation of the industry
No industry is said to be efficiently regulated if it needs to be constantly supervised by an apex body. Hence, IRDAI ensures that the insurance industry has the optimum amount of self–regulation. This is achieved by undertaking inspections, audits, investigations and calling for information from insurance companies, insurance intermediaries, and other insurance–related businesses. IRDA has issued set rules that need to be followed by the insurance companies; however, there are times when two insurers get into a dispute. In such a scenario, the IRDA offers dispute solutions through the IRDA ombudsman.
Disclaimer: The above information is indicative in nature. For more details on the risk factor, terms and conditions, please refer to the Sales Brochure and Policy Wordings carefully before concluding a sale.