The Insurance sector in India operates under the aegis of the Ministry of Finance and is regulated by the Insurance Regulatory and Development Authority (“IRDA”). It helps in mobilizing the savings while acting as a financial intermediary and promoter of investment activities at the same time. It stabilizes financial markets and plays the role of a risk manager.
The insurance industry in India can be mainly classified into:
Life Insurance; and
The Foreign Direct Investment (“FDI”) regime promoted by the Department of Industrial Policy and Promotion (DIPP) allows the Insurance sector in India to invite private participation from foreign players as well. The insurance industry in India at present consists of 52 insurance companies of which 24 are in life insurance business and 28 are in non-life insurance business.
The Insurance Regulatory and Development Authority (IRDA) is the regulatory authority for the Insurance industry in India. It was set up as an autonomous body under the IRDA Act, 1999. It frames regulations for the insurance industry in terms of Section 114A of the Insurance Act, 1938. It functions as an arm under the Ministry of Finance in India.