What is IRDAI?

What is IRDAI (Insurance Regulatory Development Authority of India)?

The Insurance Regulatory and Development Authority (IRDAI) of India is an independent body created to protect the interests of policyholders, to regulate, promote and ensure orderly growth of the insurance industry in India.

History and Purpose of IRDAI?

In I950, the Government of India nationalised India’s insurance industry and established Life Insurance Corporation (LIC) of India. In the 1990s, the government decided to open up the insurance sector to private players. A committee was set up to propose reforms and the Insurance Regulatory Development Authority of India i.e. IRDAI was formed in the year 1999, deriving its powers and functions from the IRDAI Act, 1999 and Insurance Act, 1938.

IRDAI works as an autonomous body responsible for managing and regulating the insurance and reinsurance industry in India along with registering and/or licensing insurance, reinsurance companies and intermediaries according to the regulations. Some purposes of IRDAI are:

  • To protect the interest of the policyholders
  • To regulate and promote the orderly growth of the insurance and reinsurance industry
  • To ensure speedy claim settlement and preventing Insurance frauds and other malpractices
  • To better the standards of insurance markets
  • To take action when established regulatory standards are ineffectively enforced

Powers and Functions of IRDAI in the Insurance Industry

To protect the interests of policyholders, the IRDAI was granted significant responsibilities. Here are some of them.

  • Efficiently conducting insurance business and protection of the interests of the policyholders in matters concerning assigning of policy, nomination by policyholders, insurable interest, settlement of insurance claim, surrender value of the policy and other terms and conditions of contracts of insurance
  • Approving product terms and conditions offered by various insurers
  • Regulating investment of funds by insurance companies and maintaining a margin of solvency
  • Specifying financial reporting norms of insurance companies
  • Ensuring insurance coverage are provided in the rural areas and also to the vulnerable sections of society

What does the IRDAI do?

The activities of the IRDAI are governed by Section 14 of the IRDAI Act, 1999. It states the duties, powers, and functions of IRDAI. These include:

1. Registering and Regulating Insurance Companies:

The IRDAI regulates insurance companies overseeing premium rates and terms of non-life insurance covers, specifying financial reporting norms of insurance companies, and setting up licensing norms.

2. Protecting Policyholders’ Interests:

The IRDAI’s other equally important function is protecting your interests. It does this by regulating the investment of your funds by insurance companies and by ensuring that insurance companies maintain their solvency ratio so your interests are safeguarded.

However, none of its activities includes selling or promoting any insurance policies.

So, the next time you receive a call/ message/email from someone posing as an IRDAI representative, seeking your personal insurance details, contact the police or register a complaint with the IRDAI. Call the Toll Free Number 155255 (or) 1800 4254 732 or report the incident at complaints@irda.gov.in