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IRDA - Role, Objectives and Functions

IRDA - Insurance Regulatory Development and Authority is the statutory, independent and
apex body that governs and supervise the Insurance Industry in India.

It was constituted by Parliament of India Act called Insurance Regulatory and Development
Authority of India (IRDA of India) after the formal declaration of Insurance Laws
(Amendment) Ordinance 2014, by the President of India Pranab Mukherjee on December

o IRDA Act was passed upon the recommendations of Malhotra Committee report (7
Jan,1994), headed by Mr R.N. Malhotra (Retired Governor, RBI)
o Main Recommendations - Entrance of Private Sector Companies and Foreign
promoters & An independent regulatory authority for Insurance Sector in
o In April,2000, it was set up as statutory body, with its headquarters at New Delhi.
o The headquarters of the agency were shifted to Hyderabad, Telangana in 2001.

Objectives of IRDA:

o To promote the interest and rights of policy holders.

o To promote and ensure the growth of Insurance Industry.
o To ensure speedy settlement of genuine claims and to prevent frauds and
o To bring transparency and orderly conduct of in financial markets dealing with

Organisational Setup of IRDA:

IRDA is a ten member body consists of :

o One Chairman (For 5 Years & Maximum Age - 60 years )

o Five whole-time Members (For 5 Years and Maximum Age- 62 years)
o Four part-time Members (Not more than 5 years)
The chairman and members of IRDAI are appointed by Government of India.

The present Chairman of IRDAI is Mr T.S Vijayan.

Functions And Duties of IRDA:
Section 14 of IRDA Act,1999 lays down the duties and functions of IRDA:

o It issues the registration certificates to insurance companies and regulates them.

o It protects the interest of policy holders.
o It provides license to insurance intermediaries such as agents and brokers after
specifying the required qualifications and set norms/code of conduct for them.
o It promotes and regulates the professional organisations related with insurance
business to promote efficiency in insurance sector.
o It regulates and supervise the premium rates and terms of insurance covers.
o It specifies the conditions and manners, according to which the insurance companies
and other intermediaries have to make their financial reports.
o It regulates the investment of policyholder's funds by insurance companies.
o It also ensures the maintenance of solvency margin (company's ability to pay out
claims) by insurance companies.

Role, duties and responsibilities of IRDAI are stated here under:

o IRDAI provides a certificate of registration to a life insurance company.

o IRDAI is responsible for the renewal, modification, withdrawal, suspension or
cancellation of this certificate of registration.
o IRDAI frames regulations on protection of policyholders' interests.
o It offers policyholders the right to voice their complaints against insurers or
insurance companies.
o The IRDAI has set up the grievance redressal cell to take up the complaints of the
o It specifies the requisite qualifications, code of conduct and practical training for
intermediaries or insurance intermediaries and agents.
o It specifies the code of conduct for surveyors and loss assessors;
o It promotes efficiency in the conduct of insurance businesses;
o It promotes and regulates activities of professional organisations connected with life
o It levies fees and other charges to carry out the purposes of the IRDAI Act;
o It can call for information from, undertake the inspection of, conduct enquiries and
investigations including the auditing of insurers, intermediaries, insurance
intermediaries and other organisations connected with the business of life
o It specifies the form and manner in which books of account should be maintained
and statements of accounts should be rendered by insurers and other insurance
o It regulates the investment of funds by insurance companies;
o It regulates the maintenance of margins of solvency;
o It adjudicates disputes between insurers and intermediaries or insurance
o It specifies the percentage of premium income of the insurer to finance schemes for
the promotion and regulation of certain specified professional organisations;
o It specifies the percentage of life insurance business to be undertaken by an insurer
in the rural or social sector; and
o It exercises any other powers as may be prescribed.

IRDA regulates private insurance companies in India such as;

o Reliance General Insurance Company Limited.

o IFFCO Tokio General Insurance Co. Ltd
o TATA AIG General Insurance Company Ltd.
o Bajaj Allianz General Insurance Company Limited
o ICICI Lombard General Insurance Company Limited.
o Apollo Munich Insurance Company Limited
o Star Health Insurance
o Max Bupa Insurance
o Religare Health Insurance
o Future Generali India Insurance Company Limited
o Universal Sompo General Insurance Company Ltd.
o Cholamandalam General Insurance Company Ltd.
o Export Credit Guarantee Corporation Ltd.
o HDFC-Chubb General Insurance Co. Ltd.
o Bharti Axa General Insurance Company Ltd.
o Raheja QBE General Insurance Co. Ltd.

The growth Performance of the insurance industry has been increased tremendously since
the establishment of IRDA in India, which supervise and controlled the entire insurance
industry. The increase in no. of insurer both in life and non-life, growth in insurance
penetration and density, increase in no. of policies issued and increase in the speed of
claims settlement and in many more aspects the IRDA is playing a prominent role in the
Indian insurance sector.

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Dercon Stefan (2005). “Risk, Insurance and Poverty: A Review GOI. IRDA ACT 1999” GOI Retrieved 19
June 2012.

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GOI IRDA ACT 1999, Department of Financial Services, GOI. Retrieved 19 June 2012

Goyal, K. (2004), “Growth of Private Insurance companies,” journal of economics, vol.3, pg no.233-241,