Overview of Insurance Industry in India
Insurance in India involves individuals or entities obtaining financial protection against losses from insurance companies through a policy. Recent trends include sector opening, growth of life and non-life insurance, and regulatory initiatives by IRDA. The Insurance Regulatory and Development Authority (IRDA) plays a key role in governing and supervising the industry. Established in 2000, its objectives include promoting policyholders' interests.
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Insurance Industry in India Insurance is a contract that is generally represented by a policy, wherein an individual or an entity gets some financial protection or compensation against losses from an insurance company. Insurance is very important we can say that it is one way of managing risks. So, when you buy insurance, you are transferring the cost of any potential loss to the insurance company against a premium/ fee. These insurance companies invest these funds in a secure manner so that they grow and when there is a claim, the payout can be made without any hassle.
Recent Trends in Insurance sector 1. Opening up of insurance sector 2. Restructuring og GIC 3. FDI in insurance 4. New entrants in the insurance sector 5. Growth of Life Insurance 6. 6. Growth of nonlife insurance 7. Consumer Grievance Redressal cell
9. New initiatives taken in the insurance sector (a)Micro Finance (b)Corporate Governance Guidelines for insurance companies (c) Guidelines on credit insurance Based on the reforms given by Malhotra Committee IRDA Bill was passed in December 1999. The IRDA became a statutory body in April 2000.
Insurance Regulatory and Development Authority (IRDA) 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 26,2014. IRDA Act was recommendations of report (7 Jan,1994), headed by Mr R.N. Malhotra (Retired Governor, RBI) Main Recommendations - Entrance of Private Sector Companies and Foreign promoters & An passed Malhotra upon Committee the
independent regulatory authority for Insurance Sector in India In April,2000, it was set up as statutory body, with its headquarters at New Delhi. The headquarters of the agency were shifted to Hyderabad, Telangana in 2001. Objectives of IRDA: To promote the interest and rights of policy holders.
To promote and ensure the growth of Insurance Industry. To ensure speedy settlement of genuine claims and to prevent frauds and malpractices To bring transparency and orderly conduct of in financial markets dealing with insurance.
Organisational Setup of IRDA: IRDA is a ten member body consists of : One Chairman (For 5 Years & Maximum Age - 60 years ) Five whole-time Members (For 5 Years and Maximum Age- 62 years) Four part-time Members (Not more than 5 years) The chairman and members of IRDAI are appointed by Government of India.
Functions And Duties of IRDA: Section 14 of IRDA Act,1999 lays down the duties and functions of IRDA: 1. It issues the registration certificates to insurance companies and regulates them. 2. It protects the interest of policy holders. 3. It provides license to insurance intermediaries such as agents and brokers after specifying the required qualifications and set norms/code of conduct for them.
4. organisations related with insurance business to promote efficiency in insurance sector. 5. It regulates and supervise the premium rates and terms of insurance covers. 6. It specifies the conditions and manners, according to which the insurance companies and other intermediaries have to make their financial reports. 7. It regulates the investment of policyholder's funds by insurance companies. 8. It also ensures the maintenance of solvency margin (company's ability to pay out claims) by insurance companies. It promotes and regulates the professional
