IRDA Full Form is Insurance Regulatory and Development Authority of India. IRDA is an independent statutory body that governs and regulates the entire insurance industry in India. The headquarters of IRDA is in Telangana, Hyderabad. It was constituted by Insurance Regulatory and Development Authority Act, 1999 based on the Malhotra Committee report and passed by Parliament of India.
It protects the interest of policymakers and assures orderly growth of insurance and policies in India. Some of the key duties and functions of IRDA include (1) To register and regulate insurance companies, (2) To provide license and establish norms for intermediaries, (3) To promote professional insurance companies, (4) To assure solvency margin maintenance, (5) To ensure coverage of insurance in the vulnerable sectors and rural areas of India.
IRDA Full Form – Additional Information
Insurance Regulatory and Development Authority, which will hereinafter be referred to as IRDA throughout the article, is an important authority in the insurance and development sector. It is a prime regulatory body as far as the aforementioned sector is concerned. IRDA is basically an autonomous institutional body that acts as the apex monitoring and regulatory body in the insurance sector of India.
It undertakes several projects and formulates policies directed towards the development of the sector. This institutional body was established vide the Insurance Regulatory and Development Authority Act 1999, which is an Act of Parliament. The Act was duly passed by the then Union Government. The headquarters of the institutional body is located in Hyderabad city, Telangana but originally the headquarters was situated at the capital city, New Delhi up till 2001. As of 2016, the body functions under the leadership of T.S. Vijayan, who acts as the Chairman of the same.
IRDA is known for many activities, particularly its demand for a rise in the Foreign Direct Investment (abbreviated as FDI) limit in insurance sector to 49 percent from the original 26 percent. The struggle ended when in the year 2014, the Government of India decided to hike the limit to the demanded 49 percent. It is regarded as one of the most crucial policy decisions for the year 2014 to be taken by the Government of India.
IRDA has played a vital role in the development of the insurance sector in the country. It is not a mere regulatory body but has been armed with essential powers for the purposes of realizing its objectives and aims more concretely. It is, therefore, important that some of the important facets involved in the whole institution of IRDA are deal with. Thus, here are five points about IRDA that everyone must know about.
History of IRDA
An institution such as IRDA needs to be discussed deeply and the best way to understand the core of it is to begin with its history of insurance. Insurance is not a new concept in Indian jurisprudence, as it has found mentions in books such as Manusmriti, Arthashastra, Dharmashastra, etc. In the year 1814, insurance was introduced as a full-fledged business in the country. It happened with the foundation of the Oriental Life Insurance Company in the city of Calcutta.
In the year 1829, Madras witnessed the rise of insurance business with the establishment of the Madras Equitable. In the Bombay Presidency, there were related establishments such as Empire of India, the Bombay Mutual, and Oriental. Indian offices, however, could not cope with the stiff competition delivered by foreign insurance companies set up in India such as Albert Life Insurance, Liverpool and London Globe Insurance, Royal Insurance, etc. In the year 1914, the publishing of returns was started by the ruling Government. A statutory attempt was made for the regularization of Insurance sector in the country with the enactment of the Indian Life Assurance Companies Act 1912.
In the year 1928, the Government enacted the Indian Insurance Companies Act for the purpose of collection of statistical data relating to non-life and life business conducted in the country by foreign and indigenous insurance companies. Subsequent amendments were made to the Act, which provided for better controlling framework over the functions of the insurers.
Modern Day Insurance regime
In the year 1950, the Insurance Amendment Act was passed, which clearly abolished the system of Principal Agencies. Even still, there were allegations of irregular and mala fide trade practices in the insurance sector, which ultimately forced the Government of India to announce the nationalization of insurance business in the country. Following the announcement, an ordinance was passed in the year 1956 that effectuated nationalization of the Life Insurance area.
The Ordinance also resulted in the foundation of the Life Insurance Corporation (abbreviated as LIC). The effect of the Ordinance was that it caused LIC to absorb 154 Indian insurers and 16 non-Indian insurers. Until the late 90s, the LIC possessed a monopoly in the insurance sector but the situation changed when India opened itself to the private sector. This shows that Insurance sector has been a thriving business in the country since ancient period. It has grown itself into a mighty business arena where many companies compete to profit more.
General Insurance and IRDA
The history of General Insurance in India can be easily traced back to the iconic Industrial Revolution and rise of inter-country trade. In India, it was the British that brought general insurance in India. It all officially started with the foundation of the Triton Insurance Company Ltd in 1850 in the city of Calcutta. Eventually, in the year 1907, the establishment of the Indian Mercantile Insurance Ltd. happened, which was essentially the first of its kind to conduct transactions in general insurance. In the year 1972, the General Insurance Business (Nationalization) Act was passed that effectuated nationalization of the general insurance business from the year 1973.
In the year 1971, the General Insurance Corporation of India was established and incorporated but started its business from the year 1973 only. Following the LPG phenomenon, the Government of India constituted a committee headed by former RBI Governor RN Malhotra that made recommendations to improve the insurance sector in the country. It was this committee that recommended that the Government of India should open the sector to private insurance companies. It was in pursuance of these recommendations, the Government of India passed the Insurance Regulatory and Development Authority Act 1999 leading to the establishment of IRDA.
The IRDA announced that Indian market would open to the private sector in the year 2000. Non-Indian companies were permitted ownership to the limit of 26 percent. IRDA was empowered to formulate regulations vide Section 114 A of the Insurance Act 1938. Ever since then, IRDA has continued coming with regulations and policies to improve the sector and make it more capable. All of this quite succinctly summarize the rich history of IRDA in India and shows how much important IRDA is to the Indian insurance sector.
Organizational structure of IRDA
Section 4 of the Insurance Regulatory and Development Authority Act 1999 provides for the organizational structure of IRDA. It specifically provides for the constitution of the authority. It provides that IRDA shall comprise ten members, which include a chairman, five members working as whole time members, and four members that work in the capacity of part-time members. It is to be noted that all members of the organization are appointed by the Union Government.
Career options with IRDA
IRDA is a reputed statutory body in the country, whose contributions are not unknown to the country and beyond. Thus, working with IRDA is a prestigious offer. There are several career opportunities available with IRDA. The position of Junior Officer is a highly paid position, take for example. The eligibility criteria for a position in IRDA are that the candidate must have obtained first class in his/her graduation and the age limit has been set from 21 to 30.
Application forms for a career in IRDA are generally available in the month of January, followed by the organization of an examination in the month of February. This examination is organized in three phases, wherein Phase One is an online objective examination; Phase Two is a computer-based examination, and Phase Three is the final interview round. Emphasis is mostly given for English, Reasoning, Quantitative, and general knowledge.