IRDA ACT

IRDA stands for insurance Regulatory and Development Authority of India.

It is an autonomous and the statutory body tasked with regulating and
promoting insurance and reinsurance in the country. IRDA was constituted
by the Insurance Regulatory and Development Authority Act - IRDA Act,
1999 and has its headquarters in Hyderabad, Telangana. In the recent times,
IRDA has moved on to a more digital platform to help and cater the needs of
both the Insurance companies, agents and policyholders. Every year IRDA
online exam is conducted and the exam results are displayed on the IRDA
website..
Composition of Authority
The Authority shall consist of the following members, namely:--
(a) a Chairperson;
(b) not more than five whole-time members;
(c) not more than four part-time members,
to be appointed by the Central Government from amongst persons of ability, integrity and standing
who have knowledge or experience in life insurance, general insurance, ac tuarial science, finance,
economics, law, accountancy, administration or any other discipline which would, in the opinion of the
Central Government, be useful to the Authority:
PROVIDED that the Central Government shall, while appointing the Chairperson and the whole-
time members, ensure that at least one person each is a person having knowledge or experience in
life insurance, general insurance or actuarial science, respectively.

OBJECIVE OF IRDA ACT

To promote the interests and rights of the policyholders. To promote and

monitor the growth of the insurance industry. To prevent frauds and
misselling of insurance product and ensure speedy settlement of genuine
claims To bring transparency and proper code of conduct in financial markets
dealing with insurance..

FUNCTIONS AND DUTIES OF IRDA ACT

• Issuing the registration certificates to insurance companies and

regulate them .
• Protect the interests of the policyholders.
 • Provide licences to insurance intermediaries like agents and brokers
after stating the required qualifications and set guidelines for their code
of conduct.
• Promote and regulate professional organisations related to insurance
to enhance the development of the sector.
• Regulate and supervise the premium rates and terms of the insurance
policies.
• Regulate the investment of the policyholders’ funds by the insurance
companies..
• Ensure the maintenance of the solvency margin i.e. the ability of an
insurance company to pay out claims..

POWERS OF IRDA

• To avail the applicant a certificate of registration, renewal,

modification, withdrawal, suspension or cancellation of
such registration.
• To protect the interests of the policy holders in cases
related to assigning and nomination of policy holders,
understanding of insurance claims, insurable interests,
surrendering of the value of the policy and other terms
and conditions of the insurance contract.
• To specify the necessary qualifications, code of conduct
and practical training for intermediary or insurance
intermediaries and agents.
• Explaining the required code of conduct to the surveyors
and loss assessors.
• To ensure that the proficiency and efficiency of the
conduct of the business of insurance.
• To encourage and regulate the relationship between the
professional organisations and the insurance and
reinsurance businesses.
IRDA Effect
Effects of Insurance Regulatory and Development Authority are as follows:

Effects over-regulation of Insurance Sector

IRDA has a huge impact on the Insurance sector of India. The
Authority has to keep a close check on the Insurance sector to
ensure that the interests of the policyholders remain intact. It
regulates every activity of the insurance sector.

Effects over Policyholders Interests Protection

The main purpose of this Authority is to protect the interests of
the policyholders and it has kept up with its purpose.

Effects over Awareness to Insurance

The IRDA, in order to ensure that the interests of the
policyholders are protected, has to make sure that policyholders
are aware of all the latest policies and plans of the Authority that
would benefit them.

Effects over Insurance Market

There is a great transformation in the market due to the effects of
the Insurance Regulatory and Development Authority be it with
respect to marketing, insurance products, competitions and
customer awareness.
Effects over Development of Insurance Product
In order to ensure the growth of the insurance market, IRDA has
to introduce new methods that would help in increasing its
efficiency. The development of Unit-Linked Insurance Plans is the
result of privatization of the insurance sector, a step taken by the
Insurance Regulatory and Development Authority of India.

Effects over Competition in the Insurance Sector

Initially, when there was no privatisation there was no
competition. The different companies in the Insurance sector had
to compete amongst themselves. But, after the advent of
privatization of the Insurance sector the competition has
increased, now it means international competition. It has
increased the level of competition .

Effects over Government Responsibility

It is because of the Insurance Regulatory and Development
Authority (IRDA) that the government is doing everything possible
to ensure uniformity, accountability and responsibility in the
Insurance sector.

Effects over Banks and Post Offices

Insurance has resulted in giving security against any kind of
uncertainties or risks, so the Insurance sector has become a
popular medium for savings and investments. Thus, the
Insurance Regulatory and Development Authority has helped in
diverting the flow of funds from banks and post offices to the
insurance industry.
Effects over individual Life’s
Now, because of the awareness created by the Insurance
Regulatory and Development Authority and the policies
introduced by it has resulted in a great impact on the life of an
individual.

Effects over Share Market

Since the Insurance Regulatory and Development Authority has
introduced Unit-Linked Insurance plans (an insurance plan in
which the policyholders get investment and insurance in a single
plan) more and more people are trying out the plan. Therefore,
with the help of insurance products can now be raised more easily
for the companies and has attached many persons indirectly with
the activities of the share market.

Effects over the Economy of India

Insurance Regulatory and Development Authority effects over the
economic development of the country because money invested by
the investors or the individuals in various types of insurance
products has channelized the funds of a country for a non-
economic activity to economic activity and has made available to
the government of a country in order to implement the various
developmental activities in the country.