Insurance Regulatory and Development Authority
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.
Insurance Regulatory and Development Authority (IRDA) Act, 1999 and the IRDA Rules & Regulations in India
The duties, powers and functions of the IRDA have been specified under Section 14 of the IRDA Act, 1999. The IRDA has the duty to promote, regulate and ensure orderly growth of the insurance and re-insurance businesses across India, subject to the provisions of this Act and any other additional law that is being enforced. This Act also lays down the code of conduct for insurance intermediaries.
To carry out insurance business in India, the insurers are required to abide by the guidelines as laid down by the Insurance Regulatory and Development Authority of India Act, 1999.
Entity set up
The entities interested to carry out insurance business in India and the compliances required to be undertaken by them are provided as under:
Nature of entity: A company which is formed and registered under the Companies Act, 1956/ 2013 and in which the aggregate holdings of equity shares by a foreign company, either by itself or through its subsidiary companies or its nominees, do not exceed 26% paid-up equity capital of such Indian insurance company.
Paid-up capital: A paid-up equity capital of rupees one hundred crores, in case of a person carrying on the business of life insurance or general insurance; or a paid-up equity capital of rupees two hundred crores, in case of a person carrying on exclusively the business as a re-insurer.
Permission: The insurer is required to make an application in the prescribed format along with the requisite fees to the Insurance Regulatory and Development Authority, for procuring the license/ renewal, to carry out the business of insurance in India.
Deposit: Every insurer shall, in respect of the insurance business carried on by them deposit and keep deposited with the Reserve Bank of India for and on behalf of the Central Government the amount hereafter specified, either in cash or securities:
- in the case of the life insurance business, a sum equivalent to 1%. of the total gross premium written in India in any financial year not exceeding rupees INR 100,000,000.
- in the case of the general insurance business, a sum equivalent to 3% of the total gross premium written in India, in any financial year not exceeding INR 100,000,000.
- in the case of re-insurance business, a sum of INR 200,000,000
- where the business is done or to be done is marine insurance only and relates exclusively to country craft or its cargo or both, the amount to be deposited under this subsection shall beINR 100,000.
IRDA restricts insurance companies to exclude illness criteria