We all know what is insurance and what role it plays in the economic development of our nation. By now everyone must be familiar with insurance business; it is a contract between individuals or group or businessmen & insurance companies. The extent of the insurance contracts differs i.e. some contracts are for one year and some are for twenty years or more and size of such contracts are also very large. As insurance contracts are of assurances or promises made by the insurance companies to reimburse the insured person in case of accident or mishappening but these promises are not tangible and insurance companies deals with the huge size of contracts, so this gives rise to disputes in an industry. In order to settle down such disputes, Government of each nation appoints a regulator who looks after the activities & tries to resolve the problems. Therefore, Government of India established an agency called Insurance Regulatory and Development Authority (IRDA) to supervise & resolve the issues arising in insurance sector and even look after the development of this sector. So, this article will throw a light upon Insurance Regulatory and Development Authority (IRDA) features, role, impact, duties, powers, policies etc.
Insurance Regulatory and Development Authority (IRDA) Act
IRDA Act was passed by parliament in December’1999 and it received president approval in January’2000. The main aim of the authority is “to protect the interest of holders of Insurance policies to regulate, promote and ensure orderly growth of Insurance industry & for matters connected therewith or incidental thereto.” Under this Act, Controller of Insurance under Insurance Act 1398 was replaced by newly established authority called Insurance Regulatory and Development Authority (IRDA).
Features of Authority:
- The authority will consists of chairman, whole time members & part time members and they will act as a group of members and will work jointly not individually like Controller of Insurance.
- In case if any member resign or die, the authority will still continue to work.
- A common seal with power to enter into a contract by affixing a stamp on the documents.
- Sue or be sued means the Authority can file a case against any person or organization and vice versa.
Duties, Powers & Functions of Authority (Section 14):
Duties: – The duty of the authority is to control, promote and safeguard orderly growth of the insurance industry and reinsurance business subject to the provisions of any other provisions of the act.
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Powers & Functions to:-
(1) To protect the interest of the policy holders related to surrender value of policy, settlement of insurance claims, insurable interest, nomination by policy holders, other terms & conditions of insurance contract.
(2) In case of General Insurance, who assess the loss of policy holder should be stated the code of conduct.
(3) Promoting proficiency in the conduct of insurance business;
(4) Promoting and regulating professional organizations connected with the insurance and re-insurance business;
(5) Calling for information from, undertaking inspection of, conducting inquiries including audit of the insurers, intermediaries, insurance intermediaries and other organizations connected with the Insurance business;
(6) Stating the form and manner in which books of account shall be kept and statement of accounts shall be rendered by insurers and other insurance intermediaries;
(7) Regulating investment of funds by insurance companies;
(8) Regulating maintenance of margin of solvency i.e., having sufficient funds to pay insurance claim amount;
(9) To settle the disputes between insurers and intermediaries or insurance intermediaries
(10) Stating the percentage of life insurance business and general insurance business to be accepted by the insurer in the rural or social sector; and
(11) Exercising such other powers as may be prescribed.
Role of Insurance Regulatory and Development Authority (IRDA)
- To safeguard the interest of and secure fair treatment to insurance policy holders
- To bring quick and systematic growth of the insurance industry or sector in order to provide benefits to the common man and also to provide long term funds for accelerating growth of the economy.
- To set, promote, monitor and apply high standards of integrity, fair dealing, financial viability and capability of those it regulates.
- To make sure that insurance policy holder receives precise, accurate, clear & correct information about the products & services provided by insurance companies & also make customers aware about their duties & responsibilities in this regard.
- To ensure quick settlement of genuine claims, to prevent insurance frauds, scams & other malpractices and put in place operative grievance redressal machinery.
- To boost transparency, fairness, and orderly conduct in financial markets dealing with insurance & build a trustworthy management information system in order to enforce high standards of financial soundness amongst market players.
- To take appropriate actions where such standards do not prevail or are inadequate & ineffectively enforced.
- To bring about optimal amount of self-regulation in day-to-day activities of the industry reliable with the requirements of prudential regulation.
Impact of Insurance Regulatory and Development Authority (IRDA)
1. Impact over Regulation of Insurance Sector
IRDA has a great impact on the overall regulation of Indian Insurance Sector. In order to keep the proper protection of the policy holder’s interests, Insurance Regulatory and Development Authority (IRDA) has a close observation over the different activities of insurance sector in India.
2. Impact over Policyholders Interests Protection
The core objective or purpose of the Insurance Regulatory and Development Authority is to protect the interests of policyholders and IRDA is trying its level best in this context.
3. Impact over Awareness to Insurance
In order to increase the awareness of insurance in the society, IRDA is trying to take different steps in making the activities of insurance sector transparent.
4. Impact over Insurance Market
There is great transformation in the insurance market due to the impact of Insurance Regulatory and Development Authority be it with respect to marketing, insurance products, competition & customer awareness.
5. Impact over Development of Insurance Product
Insurance Regulatory and Development Authority (IRDA) has brought a revolution in the development of insurance products. The development of ULIPs (Unit-Linked Insurance Plans) is the result of privatization of the insurance sector.
6. Impact over Competition in the Insurance Sector
Earlier there was no competition in the insurance sector but due to privatization of insurance sector & inviting private players in the insurance sector, it has given rise to competition in the insurance sector.
7. Impact over Saving and Investment of Individual
Insurance Regulatory and Development Authority has made insurance so popular & profitable mode of investment and permanent place for saving amongst the individuals of society.
8. Impact over Government Responsibility
Insurance Regulatory and Development Authority (IRDA) is making the government responsible & accountable in bringing uniformity in the insurance sector due to the constant increase in the number of insurers, increasing competition, number of diversifies products and diversifies activities of the insurers.
9.Impact over Banks and Post Offices
Insurance has resulted in giving security against any kind of uncertainties or risks, so the insurance sector has become popular medium for savings & investments and thus has diverted the flow of funds from banks & post offices to insurance industry.
10.Impact over Individual Life’s
Insurance Regulatory and Development Authority has developed an understanding of the insurance by putting across a great impression over the life of a common man of the society.
11.Impact over Share Market
Private insurers or players have developed ULIPs (Unit-Linked Insurance plans) in order to attract more customers and ULIPs is a result of modern insurance market. Therefore, insurance products has made simple to raise funds y the companies and has also attached many individuals of the society indirectly with the activities of share market.
12.Impact over Indian Economy
Insurance Regulatory and Development Authority has an impact over the economic development of the country because money invested by investors or individuals in various types of insurance products has channelized the funds of a country for a non-economic activity to economic activity & has made available to the governments of a country in order to implement the various developmental activities in the country.
Complaint Redressal by Insurance Regulatory and Development Authority (IRDA)
If an individual is unhappy with the insurance company, the following procedure has to be done:
- Give your complaint in writing along with the necessary support documents
- Take a written acknowledgement of your complaint with the date.
The insurance company should deal with your complaint within 15 days. Incase if that does not happen or if an individual is unhappy with their solution then one can:-Approach the Grievance Redressal Officer of its branch or any other office that you deal with.
- Approach the Grievance Redressal Cell of the Consumer Affairs Department of IRDA: Send an e-mail to complaints@irda.gov.in
- Make use of the Integrated Grievance Management System: Register and monitor your complaint at www.igms.irda.gov.in
- Send a letter or fax to IRDA with your complaint.
In the last 10 years Insurance Regulatory and Development Authority has brought a significant changes in Insurance sector and thus due to its measures there has been seen a tremendous growth in the insurance sector. Prior to Insurance Regulatory and Development Authority only Life Insurance Corporation (LIC) & General Insurance Company (GIC) were the players in Insurance sector, however due to the establishment of IRDA, 23 new players emerged in the field of insurance. And also Insurance Regulatory and Development Authority deal with any kind of discrepancy or difference in the insurance sector.
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