IRDA is the regulatory body in India that governs both Life insurance and General insurance companies. India is a vast country that offers great opportunities to varied segments one of which is the insurance sector. 

Let us understand the concept of insurance regulator in a simple way. India witnesses the concept of a joint family where the head, most commonly the grandparents, acts as the guardian of each member. The head takes care of everyone’s needs and maintains a balance for fair practices to keep the family united. He treats everyone equal and helps the family in crisis guiding them on how to steer out of it.  Now, Similar to how the head of the family plays, IRDA runs the Indian insurance industry as per its set rules and guidelines.

Insurance in India dates back to the year 1850 with the first General Insurance company established in Calcutta. Soon, with the passage of years the market became competitive as many insurers started emerging both in life and non-life sectors.

Each company practised business on its rates and rules. It made customers’ insecure which brought the credibility of the insurance market at stake. As early as the government realized this fact, they thought of securing the customer’s interest first and hence established an independent regulatory body called IRDA. 

Over time, new demands rolled and the market got flooded with several insurance products. Like a responsible head of the family would act to prevent the family from any damage, IRDA monitors the development of the insurance industry and other related activities.

Consider that to run any professional set-up or otherwise, it is very important to maintain decorum. And so, the one who breaks the rule and disturbs the peace needs to be checked immediately. Similar to this, IRDA works and acts as mentioned below in different situations.

IRDA is an autonomous body with the only mission to regulate fair practices in the insurance market to prevent loss of customers. The industry is now expected to reach US$280 billion by the year 2020. It poses that there is a long way to go and hence there arises a dire need for IRDA actions. To keep up the growth, here is how IRDA works:

At one point of time, some insurance companies used to deny coverage to their policyholders. The basis of the denial was either their choice of business to underwrite or was their understanding of good risk and bad risk. To regulate the market and minimize any sort of partial acts, the IRDA was established. 

Like the banking system in India is regulated as per the guidelines of RBI. It restricts the bankers to not behave unruly with the account holders. The banking institutes are allowed to offer loans and interest as per the rates pre-defined by RBI. It leaves no room for the monopoly to take over which in turn works best for the masses. Financial Institutes like banks and insurance companies will be successful in our democracy until market practices are for the majority and not just for fraction of people.

IRDA on the same lines of industrial practice plays a vital role like