The IRDA Insurance Regulatory and Development Authority of India is an autonomous, statutory agency tasked with regulating and promoting the insurance and re-insurance industries in India.It was constituted by the Insurance Regulatory and Development Authority Act, 1999,an act of Parliament passed by the government of India.The agency’s headquarters are in Hyderabad, Telangana, where it moved from Delhi in 2001. The IRDAI attempted to raise the foreign direct investment limit in the insurance sector to 49 percent from its current 26 percent. The FDI limit in the sector was raised to 49 percent in June 2016.
The insurance policy is a contract between the insurer and the insured, known as the policyholder, which determines the claims which the insurer is legally required to pay. In exchange for an initial payment, known as the premium, the insurer promises to pay for loss caused by perils covered under the policy language.
Insurance contracts are designed to meet specific needs and thus have many features not found in many other types of contracts. Since insurance policies are standard forms, they feature boilerplate language which is similar across a wide variety of different types of insurance policies.
The insurance policy is generally an integrated contract, meaning that it includes all forms associated with the agreement between the insured and insurer. In some cases, however, supplementary writings such as letters sent after the final agreement can make the insurance policy a non-integrated contract. One insurance textbook states that generally “courts consider all prior negotiations or agreements … every contractual term in the policy at the time of delivery, as well as those written afterwards as policy riders and endorsements … with both parties’ consent, are part of written policy”. The textbook also states that the policy must refer to all papers which are part of the policy.Oral agreements are subject to the parol evidence rule, and may not be considered part of the policy if the contract appears to be whole. Advertising materials and circulars are typically not part of a policy. Oral contracts pending the issuance of a written policy can occur.
Functions/Powers Of IRDA
Section 14 of the IRDA Act provides following powers to the authority under its sub-section 1:
- Registration: Insurance, renewal, withdrawal and cancellation of certificate of registration.
- Protection: It aims to safeguard the interests of the policy holders. It also takes care of other issues such as nomination, settlement, surrender and terms and conditions of the contract.
- Qualification: It is entrusted the task of setting up code of contract, benchmark and qualification.
- Code of Conduct: IRDA set-up the code of conduct for loss assessors and surveyors.
- Efficiency: IRDA promotes the level of efficiency in the industry.
- Professionalism: IRDA promotes and regulates the organizations related with the business of insurance and re-insurance.
- Fees: The act also determines various fees and charges to be levied.
- Information: IRDA may also call for information, conduct enquiries and audits of the insurance business as well as the related organizations.
- Terms of Business: IRDA issues various regulations for controlling rates, terms and conditions and other related issues.
- Books of Accounts: It specifies the form in which books of account need to be maintained by the insurance companies and insurance intermediaries.
- Funds Investment: The act monitor the investment of funds by the insurance companies.
- Margin of Solvency: The act regulates the maintenance of margin of solvency.
- Adjudication: To resolve issues arising out between insurance companies and with the clients.
- Supervising: To monitor the functioning of the Tariff Advisory Committee.
- Premium Income: It also specifies the percentage of the premium income which may be used for different purpose.
- Rural and Social Insurance: It also specifies the requirement of rural and social insurance business to be undertaken by the insurance companies.
Role of IRDA as a Regulatory Authority
- To safeguard the interest of the policyholders and to provide them fair treatment.
- To ensure speedy and proper growth of the insurance industry in order to benefit regular public and the economy.
- To set the benchmarks for the performance of the insurance industry.
- For ensuring that the policyholders are provided with correct and clear information. It is also ensures that they known their rights and responsibilities.
- To ensure that the claims are settled in a fair and fast manner. It also ensures that there are no insurance frauds or malpractices.
- To evaluate proper amount of self-regulation in the industry.