Explained: IRDAI's role in Indian insurance sector
IRDAI's objective is to safeguard policyholders' interests while also advancing the industry as a whole.
The main organisation that supervises the insurance sector in the country is the Insurance Regulatory and Development Authority. It establishes the rules and regulations that govern the insurance industry’s operations. Its objective is to safeguard policyholders’ interests while also advancing the industry as a whole.
The IRDAI offers recommendations to insurance companies on a regular basis. The regulator assists the insurance industry in improving efficiency in the conduct of the insurance business while also regulating insurance prices and other fees.
Until 2000, the insurance business was regulated by the Indian government. Following the suggestion of the Malhotra Committee report in 1999, the IRDAI was founded in 2000 as a stand-alone apex body. The IRDAI began accepting registration applications through invites in August 2000, allowing corporations from foreign nations to invest up to 26% in the market.
Objective
The Insurance Regulatory and Development Authority of India’s major goal is to ensure that the terms of the Insurance Act are followed. It aims to-
– Safeguard the policyholder’s interests and ensure that they are treated fairly.
– Ensure the financial soundness of the insurance business by regulating it fairly.
– Regularly establish regulations to guarantee that the industry works in a clear and unambiguous manner.
How does it work?
IRDAI guarantees that rules and regulations are written without regard for any single insurance business. The major task of IRDAI is around the policyholder’s interests in order to assure fairness and the financial stability of the sector. Its plays major role in the following-
New insurance companies are issued a certificate of registration.
Sets laws and regulations to ensure that the policyholder’s interests are protected.
Ensures that all claims are handled fairly and that no insurer will deny a claim.
Through the IRDAI ombudsman, provides solutions in the event of a disagreement.
Controls and regulates insurance rates in order to avoid abrupt increases in insurance premiums.
The apex organisation is in charge of establishing the minimum percentage limit for General and Life Insurance businesses, consequently growing both the urban and rural sectors.