The Insurance Regulatory Development Act of 1999 which was passed by the Parliament was a substitution of the insurance controller and regulator of India, the Insurance Act of 1938. IRDA is an apex institution and a regulatory body established under the IRDA Act of 1999 and the Ministry of Finance, Government of India which operates and controls the insurance sector in India.

The features of the authority are as follows:

  1. It is a body corporate.
  2. It possesses the characteristic feature of perpetual succession and also has a common seal.
  3. It has the power to establish its departmental regional offices at different locations in India.
  4. It has the authority to contract with others and can also sue and be sued in its name.

The following are the objectives of the institution:

  1. To protect and preserve the interests of the policyholder.
  2. To contribute effectively towards the operational development of the insurance sector.
  3. To avoid any fraudulent malpractices and ensure transparency in its working.
  4. To ensure prompt resolution of various claims of the customers.

The Insurance Amendment Act of 2002 was introduced during the monsoon session of the Parliament which is notified in the Official Gazette of India specifically as Act no. 42 of the year 2002. The Insurance Amendment Act of 2002 helps in coordinating the insurance business with the rules, regulations, and provisions of the IRDA Act of 1999.

 The Act of 2002, was introduced mainly to modify the Insurance Act of 1938 particularly to make provisions for the Insurance Cooperative Society which is registered under the Multi-State Cooperative Societies Act of 1984 where there exists a minimum paid-up capital of Rs.100 crore, eliminating the deposits as mentioned under Section 7 of the Act.

As per the amendment of section 42A of the Insurance Act, it claims that-

No insurer has the authority to commence or transact any business about insurance in India using any principal agent, special agent, or chief agent on and after the beginning of the Insurance Amendment Act of 2002.

Features of the Insurance Amendment Act of 2002

  1. It helps in promoting and regulating the professional institutions that serve the insurance sector in India.
  2. It supports carrying on any insurance business by the Insurance Cooperative Society, where every such society is deemed to be an insurer.
  3. It helps in coordinating with the rules and regulations of IRDA set up under the IRDA Act of 1999.
  4. It ensures transparency, fairness, and accountability within the insurance sector to protect the interests of the policyholders.

Conclusion

The Insurance Amendment Act, 2002 helps to control and direct the insurance business. It enabled periodical valuation which assisted in analyzing the financial condition of the insurance sector. It has laid down several provisions that aim to bring professionalism to the insurance business.