The Insurance Regulatory and Development Authority (IRDA) was constituted as an autonomous body to regulate and develop the business of insurance and re-insurance in India. The Authority was constituted on April 19, 2000, vide Government of India’s notification No. 277.
The Insurance Regulatory and Development Authority Act, 1999, was enacted by Parliament in the fiftieth year of the Republic of India to provide for the establishment of an Authority to protect the interests of holders of insurance policies, to regulate, promote and ensure orderly growth of the insurance industry, and for matters connected therewith or incidental thereto and further to amend the Insurance Act, 1938, the Life Insurance Corporation Act, 1956 and the General Insurance Business (Nationalisation) Act, 1972. The Act was approved in the Parliament in December 1999 and the insurance sector was thrown open for private licensees on August 15, 2000. IRDA was constituted in terms of the Insurance Regulatory and Development Authority Act, 1999, as the regulator of the Indian Insurance industry.
IRDA was set up in 1996 but it was formally constituted as a regulator of the insurance industry in April 2000. The regulator was initially known as the Insurance Regulatory Authority but was subsequently rechristened as Insurance Regulatory and Development Authority as it was provided that it had a broader role to perform in the Indian insurance market. It has not only to frame and issue statutory and regulatory stipulations, guidelines, and clarification but it has also to perform a developmental and promotional role. The developmental and promotional role of the regulator include facilitating the growth of the market by attracting large number of players, integrating of the insurance market with the domestic financial services market, and synchronising the Indian Insurance market with that of global insurance market. Thus, the objectives of IRDA are two fold: policyholder protection and healthy growth of the insurance market
IRDA has a Chairman and four whole-time and four part-time members. IRDA has constituted the insurance Advisory Committee and in consultation with this committee has brought out seventeen regulations. A leading consumer activist has also been inducted into the Insurance Advisory Committee. In addition, representatives of consumers, industry, insurance agents, women’s organisations, and other interest groups are a part of this committee. It has also formed a Consumer Advisory Committee and a Surveyor and Loss Assessors Committee. It has a panel of eligible Chartered Accountants to carry out investigation, inspection, and so on.
IRDA has till 2001 issued seventeen regulations in the areas of registration of insurers, their conduct of business, solvency margins, conduct of reinsurance business, licensing, and code of conduct intermediaries. It follows the practice of prior consultation and discussion with various interest groups before issuing regulations and guidelines.'”