Role of Insurance Regulatory & Development Authority of India (IRDAI):
The statutory authority for insurance business in India is IRDAI. The Authority shall have the duty to regulate, promote and ensure orderly growth of the insurance business and re-insurance business and its Mission is:
- To protect the interest of and secure fair treatment to policyholders;
- To bring about speedy and orderly growth of the insurance industry (including annuity and superannuation payments), for the benefit of the common man, and to provide long term funds for accelerating growth of the economy;
- To set, promote, monitor and enforce high standards of integrity, financial soundness, fair dealing and competence of those it regulates;
- To ensure speedy settlement of genuine claims, to prevent insurance frauds and other malpractices and put in place effective grievance redressal machinery;
- To promote fairness, transparency and orderly conduct in financial markets dealing with insurance and build a reliable management information system to enforce high standards of financial soundness amongst market players;
- To take action where such standards are inadequate or ineffectively enforced;
- To bring about optimum amount of self-regulation in day-to-day working of the industry consistent with the requirements of prudential regulation.
Consumer education and policyholder protection being two sides of the same coin, the Regulator has an onerous responsibility towards consumer education as it has for policyholder protection. In fact, Consumer Education is a part and parcel of Policyholder Protection. Towards this end, IRDA has, over the years taken several initiatives through various media print, television and radio.
IRDA also encourages and supports consumer bodies to conduct seminars on insurance, thereby not only educating the consumer but also providing a platform for the consumer to interact with its representative(s) who, it makes sure, participate in such seminars.
The IRDA itself conducts/participates in and supports several national level seminars on different insurance topics/subjects as well as consumer related issues through which it reaches out to the public. Currently, IRDA is actively working on a Consumer Portal that is proposed to be launched shortly.11
File & Use System:
Insurers file with IRDA new insurance products and modifications to existing insurance products as required by the “File & Use” system. Insurers have to market the product strictly in accordance with the terms and conditions and other features of the product as cleared by the Authority (i.e. IRDA). They are neither supposed to alter them nor to (i) Offer premium rates outside the range filed with IRDA; (ii) Offer discounts in premiums not specified in the filing; (iii) Offer discount in the premium without specific approval for the same from the underwriter and Appointed Actuary and (iv) Offer enhanced benefits on the products without charging any premiums.
Violation of these provisions by insurers ultimately affecting the interest of the policyholders and shareholders as well would certainly attract regulatory penal action.