IRDA Full Form

IRDA is considered an apex body that is associated with regulating and supervising the insurance sector. The primary aspect of the body is to safeguard the interests of the policyholders and ensure the growth of the insurance sector within a country. Presently, it is headquartered in Hyderabad and headed by Subhas Candra Kunthea. It is a statutory corporation founded in 1999 and 24 companies have been enlisted under this apex body.  “Argon Life Insurance”, “Tata AIA Life insurance” are some of them. However, there are two parts under this apex body namely life insurance companies and non-life insurance companies. The above mentions come under life insurance companies where National Insurance Co. Ltd, SBI general insurance falls under the second category. Presently it holds a $1.28 trillion market share accounting for 51% of the national GDP signifying its importance in the capital market.

Overview of IRDA

IRDA is also known as Insurance Regulatory and Development Authority has the duty to promote, regulate and ensure the growth of insurance. The insurance companies, the product regulations, the policy regulations are coming under the rule of IRDA. IRDA monitors the investments of funds and judges the disputes between the insurers and intermediaries to maintain a healthy financial balance.

Role of IRDA

The insurance regulation consists of several key functions including company license, product regulation, producer license, market regulation, financial regulation, and consumer service. It is important for every company to understand the insurance-related rules and laws provided by the state and apply them before selling their products or services in the market. Re-insurance is also an important work that is regulated by IRDA and even a company can face different consequences if the company shows any regulatory violation.. Product regulations, market regulations can be beneficial for the consumers, and if any violation is found in these sectors, the insurance department can provide some recommendations that can be beneficial for the company’s operation.

Reasons for the formation of IRDA

The most important and primary reason for the formation of IRDA is to protect Indian consumers. The fundamental reason for government regulation of insurance focuses on the commoners of a state and sensitive to the local social and economic condition. The officials of the IRDA act as the regulator of the industry and oversee the functioning of the Life Insurance and General insurance companies. The company focuses on the protection of the economy of both policyholder and the policymaker. Under the IRDA the insurer needs to have a policy, which should be approved by the board for the further process. If the policyholder follows all the rules and steps, IRDA can assure to provide the proper protection to the policyholder’s interest. It also helps in the promotion and orderly growth of the insurance industry. Grant, revoking, renewing, suspending, or modifying the registration certificate of an insurance company is the main objective of IRDA.

The certification process of IRDA and companies who came under IRDA:

IRDA conducted an exam to recruit agents that can work for various insurance companies. This exam is also known as the Insurance-Agent Exam and if the applicant gets qualified in the exam, he or she gets a license of insurance valid for three years. This process is known as IRDA certification. There are several companies that came under the IRDA regulation. Some well-known insurance companies such as Bharti Axa, LIC, HDFC, ICICI, Kotak Mahindra came under the regulation of IRDA policies.

Advantages of IRDA

There are different advantageous roles played by IRDA. One of the most important role that is played by the IRDA is the regulation of growth and development of different sectors by protecting the policyholder’s interest. Other important roles are registering and regulating the insurance companies, licensing and regulating the insurance intermediates, etc. the main moto of the IRDA is to protect the money of the policymaker and the policyholders. It also provides security to the interest percentage of a certain amount. It also helps to regulate all the companies in the same direction and the companies have to follow all the rules and it is also beneficial for the commoners. Through the implementation of IRDA, any government officials are able to make point to point communication that eventually reduces the chances of the financial decline in the capital market as well as the insurance industry. 

Conclusion

It can be concluded that the IRDA is a regulatory framework that helps in regulating policies or securing the insurance market. On the other hand, the apex body is related to protecting the investments of the policyholders. Henceforth, it can be stated that the apex body is related to the economic growth of a country.