Finally, the decision to establish the Insurance Regulatory and Development Authority was implemented by the passing of the Insurance Regulatory and Development Authority Act, 1999. In India, presently after the opening up of the insurance sector, the regulator for the monitoring of the operations of the insurance companies is the IRDA, having its head office in Hyderabad. The regulatory framework mainly aims to focus on three areas, viz.,
The protection of the interest of the consumers
To ensure the financial soundness of the insurance industry
To pave the way to help a healthy growth of the insurance market where both the government and the private players play simultaneously.
Some of the important duties, powers and functions of Authority include to
Issue certificate of registration, to applicants interested in insurance business, and also to renew, modify, withdraw, suspend or cancel such registration
Specify requisite qualifications and practical training for insurance intermediaries and agents Specify the code of conduct for surveyors and loss assessors
Levy fees and other charges for carrying out the purposes of this Act
Control and regulate the rates, terms and conditions that may be offered by insurers in respect of general insurance business
Regulate investment of funds by insurance companies
Regulate maintenance of margin of solvency
Adjudication of disputes between insurers and insurance intermediaries
Supervise the functioning of the Tariff Advisory Committee
Specify percentage of life and general insurance business to be undertaken by the insurer in the rural or social sector.
The Authority shall consist of the following members namely a chairperson, five wholetime members and 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, actuarial science, finance, economics, law, accountancy, administration or any other discipline.
The Chairperson and every other whole-time member shall hold office for a term of five years provided that no person shall hold office as a whole-time member after he has attained the age of sixty-two (65 years for Chairman) years. A part-time member also shall hold office for a term not exceeding five years from the date on which he enters upon his office.
The IRDA shall constitute a fund to be called “the Insurance Regulatory and Development Authority Fund” and there shall be credited thereto –
(a) All Government grants, fees and charges received by the Authority;
(b) All sums received by the Authority from such other source as may be decided upon by the Central Government;
(c) The percentage of prescribed income received from the insurer.
The fund shall be applied for meeting –
Salaries, allowances and other remuneration of the members, officers and other employees of the Authority;
Other expenses of the Authority in connection with the discharge of its functions and for the purposes of this Act
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