Insurance Regulatory and Development Authority of India (IRDAI)

Insurance Regulatory and Development Authority of India (IRDAI) celebrates its 25th anniversary with a series of regulatory reforms

About IRDAI:

• Following the recommendations of the Malhotra Committee report, the IRDA was constituted in 1999 as an autonomous body to regulate and develop the insurance industry.
• It was incorporated as a statutory body in 2000 under the Insurance Regulatory and Development Authority Act, 1999.
• It comes under the jurisdiction of Ministry of Finance.
• It is responsible for managing and regulating insurance and re-insurance industry in India.
• It consists of a 10-member body comprising a chairman, five full-time members, and four part-time members.

Role & Duties:

Policyholder Protection:

• Protect the interests of policyholders and ensure their fair treatment.

Industry Growth and Economic Contribution:

• Foster speedy and orderly growth of the insurance industry, including annuity and superannuation payments, for the common man’s benefit.
• Provide long-term funds to accelerate economic growth.

Standards and Regulation:

• Set, promote, monitor, and enforce high standards of integrity, financial soundness, fair dealing, and competence among regulated entities.

Claim Settlement and Fraud Prevention:

• Ensure speedy settlement of genuine claims and prevent insurance frauds and other malpractices.
• Establish effective grievance redressal mechanisms.

Market Fairness and Transparency:

• Promote fairness, transparency, and orderly conduct in financial markets dealing with insurance.
• Build a reliable management information system to enforce high financial standards among market participants.

Enforcement and Self-Regulation:

• Take action where standards are inadequate or ineffectively enforced.
• Encourage an optimal level of self-regulation in the industry, consistent with prudential regulation requirements.

Duties:

• Certifying insurance companies.
• Protecting the interests of policyholders.
• Adjudicating disputes related to insurance.

Significance of IRDAI in transforming the Insurance sector:

In terms of growth:

• Insurance penetration, measured as the percentage of insurance premium to GDP, increased to 4.2% in 2021-22 from 2.71% in 2001-02.
• Insurance density, calculated as the ratio of premium to population, rose to $91 in 2021-22 from $11.5 in 2001-02.

Increased Employment:

• Introduction of new intermediaries like Corporate agents, Bancassurance (selling insurance products through banks), and online sales has led to increased employment opportunities.

Modernization:

• The digital transformation has been accelerated with the authority’s guidance on e-KYC, paperless policies, digital payments, etc.

Major Initiatives by IRDAI:

• ‘Insurance for All’ by 2047: Expected to lead to a significant increase in insurance penetration.
• Integrated Grievance Management System (IGMS): A system for managing grievances comprehensively.
• Saral Jeevan Bima: A standardized term life insurance product.
• Saral Pension: An immediate annuity plan.
• Bima Sugam: A one-stop digital platform for insurance services.

Ref:Source