INSURANCE REGULATORY & DEVELOPMENT AUTHORITY (IRDA)
Background
Ä 1991:
Government of India begins the economic reforms programme and financial sector
reforms
Ä 1993:
Committee on Reforms in the Insurance Sector, headed by Mr. R. N. Malhotra,
(Retired Governor, Reserve Bank of India) set up to recommend reforms.
Ä 1994:
The Malhotra Committee recommends certain reforms having studied the sector and
hearing out the stakeholders
Some recommended
reforms
Ø Private
sector companies should be allowed to promote insurance companies
Ø Foreign
promoters should also be allowed
Ø Government
to vest its regulatory powers on an independent regulatory body answerable to
Parliament
Birth of
IRDA
F Insurance
Regulatory and Development Authority (IRDA) set up as autonomous body under the
IRDA Act, 1999
F IRDA’s
Mission: To protect the interests of policyholders, to regulate, promote and
ensure orderly growth of the insurance industry and for matters connected
therewith or incidental thereto
IRDA’s
Activities
' Frames
regulations for insurance industry in terms of Section 114A of the Insurance
Act 1938
' From
the year 2000 has registered new insurance companies in accordance with
regulations
' Monitors
insurance sector activities for healthy development of the industry and
protection of policyholders’ interests
IRDA’s
Mission
Insurance Regulatory
and Development Authority (IRDA) Act, 1999 spells out the Mission of IRDA as:
§
To protect the interest of and secure
fair treatment to policyholders;
§
To bring about speedy and orderly growth
of the insurance industry (including annuity and superannuation payments), for
the benefit of the common man, and to provide long term funds for accelerating
growth of the economy
§
To set, promote, monitor and enforce
high standards of integrity, financial soundness, fair dealing and competence
of those it regulates;
§
To ensure speedy settlement of genuine
claims, to prevent insurance frauds and other malpractices and put in place
effective grievance redressal machinery;
§
To promote fairness, transparency and
orderly conduct in financial markets dealing with insurance and build a
reliable management information system to enforce high standards of financial
soundness amongst market players;
§
To take action where such standards are
inadequate or ineffectively enforced
§
To bring about optimum amount of
self-regulation in day-to-day working of the industry consistent with the
requirements of prudential regulation.
Functions
and Duties of IRDA
Section 14 of the IRDA
Act, 1999 lays down the duties, powers and functions of IRDA.
F Registering
and regulating insurance companies
F Protecting
policyholders’ interests
F Licensing
and establishing norms for insurance intermediaries
F Promoting
professional organisations in insurance
F Regulating
and overseeing premium rates and terms of non-life insurance covers
F Specifying
financial reporting norms of insurance companies
F Regulating
investment of policyholders’ funds by insurance companies
F Ensuring
the maintenance of solvency margin by insurance companies
F Ensuring
insurance coverage in rural areas and of vulnerable sections of society
Composition of IRDA
As per the section 4 of IRDA Act' 1999, Insurance
Regulatory and Development Authority (IRDA, which was constituted by an act of
parliament) specify the composition of Authority
The Authority is a ten member team consisting
of :
a) a
Chairman
b) five
whole-time members
c) four
part-time members
(all appointed by the Government of India)
Present Chairman of IRDA : T S Vijayan
The Authority is functioning from its Head Office at
Hyderabad, Andhra Pradesh.
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