What are the top 10 most important powers of the IRDA?
The IRDA of India is the apex regulator of the insurance sector of India. It was formed by Parliament of India in 1999 and later began its role as the chief regulator of the insurance business in India.
Let us look at the top 10 most important powers bestowed upon the IRDA by the Indian Parliament.
Top 10 most important powers of the IRDA
- Licenses: The IRDA has the power to accept or reject the application of any company that may want to operate within the insurance sector in India. No insurance company can operate without a license from the IRDA.
- Claim settlements: The IRDA has put in various mechanisms in place that encourage the swift and honest settlement of a policyholder’s insurance claim.
- Grievances: The IRDA has the ability to mediate between the policyholder and the insurance company in the event of a grievance. In fact, the IRDA has setup a specialized online grievance redressal system called IRDA IGMS.
- Audits: The IRDA has certain powers bestowed upon it, whereby it can conduct timely audits of the books of insurance companies, and ensures that their books are in alignment with the tenets laid down by the IRDA. This auditing system inspires confidence among policyholders.
- Regular regulations: The IRDA has the ability to survey the insurance market and enforce new regulations that it seems fit. It can change, modify, and remove any regulation that it may deem fit.
- Discourage malpractices: The entity has a no-nonsense outlook when it comes to malpractices and strictly penalizes insurance companies in case of any malpractices.
- Regulates insurance premiums: IRDA has the power to enforce regulations on insurance premium. This is done with the view of keeping insurance premium rates as low as possible and increase the penetration of insurance by making it affordable.
- Monitoring investments: IRDA monitors all investments made by insurance companies. This is done to ensure the fidelity and financial stability of insurance companies.
- Increasing rural insurance penetration: IRDA specifies a certain percentage of business that is to be carried out in rural areas of India, thereby increasing penetration and bringing the insurance product to the rural masses.
- Growth of the industry: IRDA is assigned with managing the sustainable growth of the insurance industry. It does so by enforcing all of the above tenets as and when it deems fit. The insurance sector has seen tremendous growth post the establishment of the IRDA.