IRDAI, which is the full form of the Insurance Regulatory and Development Authority of India, is a regulatory body that governs general insurance and life insurance companies in India. This standard regulatory body takes control over various problems and situations related to insurance industries. IRDAI also runs these insurance companies under some rules and regulations, with a purposeful motto, which is to give protection to the interest holders of different insurance policies for their growth.

A Brief History of IRDAI 

The first insurance in India was established in the 19th century in Kolkata, as Oriental Life insurance. A few years later in 1912, an act namely “The Indian Life Insurance Assurance Companies Act” was the first law for regulating insurances in India. In this aspect, after independence, various insurance regulatory bodies were formed such as LIC (Life Insurance Corporation) as a monopoly till 1990, when economic reform started in India. Malhotra Committee was formed to tackle market competition of Indian insurance companies for allowing private companies and foreign promoters to enhance insurance growth in the domestic market. This resulted in the setting up of an Insurance Regulatory and Development Authority (IRDA) in 1996, and the act passed in 1999, where it started as a fully autonomous body as IRDAI (Insurance Regulatory and Development Authority of India) from 19th April 2000. 

Types of Insurance Policies, that regulated by IRDAI

The insurance body is divided into two parts, that is life insurance and non-life insurance or general insurance. 

  • Life insurance: This insurance governs policies that ensure the safety of an individual’s life. 
  • Non-life insurance or general insurance: This covers excluding life insurance, that is health insurance, motor insurance (car, two-wheeler), commercial, home, travel insurance and so on. 

Objectives of IRDAI 

The main objective of IRDAI was to provide security and monitoring development of the insurance industry and other related activities. In this aspect, various objectives are:

  1. To amend the interest of several policyholders
  2. To enhance speediness of claims of resolutions
  3. To prevent and decrease fraud as well as malpractices in insurance sectors
  4. To provide safety for both consumers and insurance companies
  5. To regulate the development of the insurance industry.
  6. To establish fair practices in the financial market
  7. To enhance transparency in terms of dealing with several insurances 

Role of IRDAI 

The body is composed of several authorities under Section 4 of IRDAI Act, 1999, which is: 

  • Chairman
  • Five full-time team members
  • Four part-time team members

These members were formed with highly knowledgeable persons in the field of insurance, finance and they are appointed by the government of India. The recent chairman of this authority is Subhas Chandra Khuntia (from 2018). 

IRDAI acts as RBI (Reserve Bank of India), which takes control over all the banks, here IRDAI controls overall insurance industries. For instance:

  • IRDAI regulated the terms and rates offered by insurance for bringing equality among consumers.
  • IRDAI provides resolution and mitigation to resolve disputes between policyholder and insurer.
  • IRDAI protects claims of policyholders, issuance of various policies and policy cancellation. It also monitors that no insurance company can deny the wills of consumers. 
  • IRDAI conducts investigations and calls for annual audits to prevent any kind of misleads. 
  • IRDAI enlist major risk to Tariff Advisory Committee to prevent various insurers quote rates according to their convenience. 
  • IRDAI provides a minimum percentage for the insurer, in terms of urban and rural areas to maintain a balance in both life and non-life insurance. 

Significance of IRDAI in the Insurance Sector in India 

The very rules of IRDA were outlined under Section 114A of the insurance Act, 1938. This regulatory body then furnished its right after 2000, where 24 life insurance organizations and 31 general insurance organizations were enlisted. In this regard, a positive transformation was seen in insurance products, consumer awareness and the competitive market. The body also oversees the industry’s activities for ensuring sustainable development and enhancing revenues from policyholders and insurers. 

Future of Insurance and IRDAI in India

The revenue of IRDAI in FY2020 is 268 crores and is expected to reach up to 68% higher than 2020, by the end of 2025. Various rules were established in 2020, and IRDAI was accustomed to digitalization to enhance health and Mediclaim policies. This measures telemedicine, ‘Saral Jeevan Bima’ (2021), the new travel and car policies too. 

Conclusion 

The autonomous insurance body IRDAI has brought up many positive changes in the insurance industry in India. It continues till this date to maintain its main purpose to protect insurance growth in the country.