Insurance Regulatory & Development Authority (IRDAI) Act-1999
The Insurance Regulatory and Development Authority was established to regulate, promote and ensure orderly growth of life and general insurance industry. To perform effectively, wide powers have been given to IRDA.
This Act amends the LIC Act, 1956 and General Insurance Business (Nationalization) Act 1972 taking away their exclusive right to transact life insurance and general insurance business.
IRDA has the power to appoint additional directors on the boards of the insurance companies.
IRDA Act gives power to IRDA to take over the management of insurance companies and to appoint administrators in the event of improper management.
IRDA Act 1999 is a revolutionary piece of legislation which opened the insurance sector to private players.
The Authority consists of members as under:
- A Chairperson (Whole Time)
- Not more than five Whole-Time Members.
- Not more than four Part-Time Members.
The members would be appointed by the Central Government.
The IRDA is a corporate body, it is advised by an insurance Advisory Committee consisting of not more than 25 members representing industry, commerce, transport and consumer forum etc.
The important function of IRDA are as follows :-
- To exercise all powers and function of controller of Insurance.
- Protection of interest of the policy holders.
- To issue, renew, modify, withdraw or suspend certificate of registration.
- To specify requisite qualifications & training for insurance intermediaries and agents.
- To promote and regulate professional organization connected with Insurance.
- To conduct Inspection / Investigation etc.,
- To prescribe method of Insurance Accounting.
- To regulate investment of funds and margins of solvency.
- To adjudicate upon disputes.
- To conduct inspection and audit of insurers, intermediaries & other organizations concerned with Insurance.
With the passing of IRDA Act, 1999, Insurance Act, 1938, LIC Act, 1956, General Insurance Business Nationalization Act have been amended. Exclusive powers of LIC and GIC to transact business are withdrawn and Insurance Sector has been made open to private players with maximum 49% foreign participation.
As per IRDA Act, 1999 Life Insurance Companies and General Insurance Companies will operate as special entities. Minimum paid up capital of R.100 Crores is required to set up Life Insurance and General Insurance Company. A Reinsurance Company will be a separate entity doing only Reinsurance Business and minimum paid up capital requirement is of Rs.200 Crores.
Section 7 of the IRDA Act requires a Life Insurance Company to deposit every year with the Reserve Bank of India, an amount equal to 1% of the gross premium (but not exceeding Rs.10 Crores) A General Insurance Company is required to deposit 3% of gross premium (but not exceeding Rs.10 Crores) and a Reinsurance Company is required to deposit Rs.20 Crores.
For discharging its functions, IRDA has framed several Regulations which are binding upon the insurance companies. All regulations notified by the IRDA are finalised in consultation with Insurance Advisory Committee constituted by IRDA.
Visit Rmoneyinsurance to get latest updates on Insurance.
Subscribe to Blogs
Get latest news & updates on Insurance Policies.
Buy a Policy Now
Renew Your Policy
Share your Current Policy &
Renew it Online.
Talk to an Expert Advisor
Call us now to get answers on all your queries related to Insurance.
August 11, 2017 9:22 am
Insurance is the method of transferring, distributing and sh...
August 11, 2017 9:23 am
This policy is usually in demand by the entrepreneur involve...
July 24, 2017 1:16 pm
A claim is a demand that the Insurer should redeem the promi...
July 14, 2017 6:05 am
Central Government by notification, has framed the Redressal...
July 14, 2017 5:47 am
There is a possibility that the proposer may think that due ...
July 7, 2017 8:39 am
Savings mobilised through insurance are invested within the ...