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May 20, 2022

Understanding IRDAI and Its Role

In India, insurance has an extremely deep-rooted history. The concept of insurance dates back to many years when individuals felt a need for some sought protection or a safety net. With time this need gave birth to the insurance concept. Over time the concept of insurance has evolved. IRDAI is the acronym for Insurance Regulatory and Development Authority of India. In simple words, IRDAI is the insurance regulator in India. It overlooks the functioning of both the general insurance and life insurance companies in India. In this article, we will take a quick understanding of the IRDAI and the important role it functions.

The Birth of IRDAI

  • The autonomous body Insurance Regulatory and Development Authority of India comes under the 1999, IRDAI Act.
  • The mission of IRDAI is to secure the interests of the policyholders, to regulate, promote and ensure the growth of the Indian insurance sector, matters connected with it or are incidental.

An Overview: IRDAI

The Insurance Regulatory and Development Authority of India is the regulatory body. The IRDAI comes within the jurisdiction of the Ministry of Finance in India. The task is licensing and regulating both the insurance and re-insurance industries across the country. The IRDAI not only safeguards the interests of the policyholder but also regulates the Indian insurance industry. In India, we are all familiar with the concept of a joint family. In every joint family, there is a head, mostly in such a set up the head is the grandparents who act as the anchor or the lighting guide. This head takes care of everything happening in the house, is fair, and tells the other members what to do, how to do, and what not to do. Likewise, how the head of the family plays such a pivotal role, the IRDAI runs the insurance industry with the laid down rules and guidelines that need to adhere to. Heres’ a quick rundown to know more about the IRDAI, the apex body of insurance in India:

Understanding the Role of IRDAI in the Indian Insurance Industry

Gone are the days when insurance companies would deny claims on the premise of business choice to underwrite. It was also dependent on their understanding of both a good and a bad risk. To minimize and regulate any such acts, IRDAI came into the establishment. As we are all aware, the banks in India have to adhere to the RBI guidelines. For instance, bankers cannot behave rudely with the account holders. The banks offer loans and interest as per the prescribed guidelines defined by RBI. All of these leave no room for monopoly and work in the best of the population's interest. Here is a rundown of the role of IRDAI in the insurance industry:
  • Ensuring systematic growth of the insurance sector so that it helps people to invest in policy and be safeguarded
  • Promoting fair practices and standards of integrity in the insurance market
  • Securing the interests of the policyholder so that they have confidence in the existing system
  • Expedite the process of claim settlement and resolve related disputes timely
  • Establish standards and maintain vigilance to detect any fraud or scam

The Bottom Line

IRDAI notifies the insurance companies in India in case of regulations or changes in rules. It helps to improve the efficiency of the insurance business in terms of operations, premiums, and various other insurance-related expenses. Ensure that you remain protected throughout by buying the right type of policy such as health insurance, bike insurance, motor insurance policy, etc.  The role of IRDAI is not just limited to what is mentioned above. It also includes granting registration to insurers in the country to conduct businesses and various other functions. The role of IRDAI is paramount for its transparency and making changes timely.   *Standard T&C apply Insurance is the subject matter of solicitation. For more details on benefits, exclusions, limitations, terms, and conditions, please read the sales brochure/policy wording carefully before concluding a sale.

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