Insurance Regulatory and Development

Authority of India

GInsurance Regulatory and Development

idai Authority of India

Abbreviation IRDAI

Formation 1999

Type Regulatory Body

Legal status Active

Headquarters Sy No. 115/1,

Financial District,
Nanakramguda,
Hyderabad - 500032

Location India
Hyderabad, Telangana

Coordinates 17.385° N78.486°'E

Services Insurance of India

Owner Ministry of Finance,

Government of India

Key people Debasish Panda, IAS

(Chairperson)
Website irdai.gov.in 3
 Print Share
Evolution of insurance in India

In India, insurance has a deep-rOoted

history. It finds mention in the writings of
Manu (Manusmrithi), Yagnavalkya
(Dharmasastra) and Kautilya(Arthasastra).
The writings talk in terms of pooling of
resources that could be re-distributed in
times of calamities such as fire, floods,
epidemics and famine. This was probably a
pre-cursor to modern day insurance.
Ancient Indian history has preserved the
earliest traces of insurance in the form of
marine trade loans and carriers' contracts.
Insurance in India has evolved over time
heavily drawing from other countries,
England in particular.
1818
Advent of life insurance
business in India

1818 sawthe advent of life

insurance business in India with
the establishment of the Oriental
Life Insurance Company in
Calcutta. This Company however
failed in 1834. In l829, the Madras
Equitable had begun transacting
life insurance business in the
Madras Presidency. 1870 saw the
enactment of the British Insurance
Act and in the last three decades
of the nineteenth century, the
Bombay Mutual (1871), Oriental
(1874) and Empire of India (1897)
were started in the Bombay
Residency. This era, however,was
dominated by foreign insurance
offices which did good business in
India, namely Albert Life
Assurance, Royal Insurance,
Liverpool and London Globe
Insurance and the Indian
were up for hard compe Ask IRDAI
the foreign companies.
1914
Government of India started
publishing returns
In 1914, the Government of India

started publishing returns of

Insurance Companies in India. The
Indian Life Assurance Companies
Act, 1912 was the first statutory
measure to regulate life business.
In 1928, the Indian Insurance
Companies Act was enacted to
enable the Government to collect
statistical information about both
life and non-life business
transacted in India by Indian and
foreign insurers including
provident insurance societies. In
1938,with a view to protecting the
interest of the Insurance public,
the earlier legislation was
consolidated andamended by
the Insurance Act, 1938 with
comprehensive provisions fo
effective control over the gctivities
of insurers.
Ask IRDAI
1950
The InsSurance Amendment
Act of 1950 abolished Principal
Agencies

The Insurance Amendment Act of

1950 abolished Principal Agencies.

However, there were a large
number of insurance companies
and the level of competition was
high. There were also allegations
of unfair trade practices. The
Government of India, therefore,
decided to nationalize insurance
business.
1956
Life Insurance Corporation
came into existance

An Ordinance was issued on 19th

January, 1956 nationalising the
Life Insurance sector and Life
Insurance Corporation came into
existence in the same year. The
LIC absorbed 154 Indian, 16 non
Indian insurers as also 75
provident societies-245 Indian
and foreign insurers in al. The LIC
had monopoly till the late 90s
whenthe Insurance sector was
reopened tothe private sector.
1850
The British establish the Triton
Insurance Company Ltd

General Insurance in India has its

roots in the establishment of

Triton Insurance Company Ltd., in

the year 1850 in Calcutta by the
British.

1907
The Indian Mercantile
Insurance Ltd, was set up

In 1907, the Indian Mercantile

Insurance Ltd, Was set up. This Was
the first company to transact all
classes of general insurance
business. Ask IRDAI
1957
General Insurance Council is
formed

1957 saw the formation of the

General Insurance Council, awing

of the Insurance Association of

India. The General Insurance

Council frameda code of conduct

for ensuring fair conduct and
sound business practices.

1968
Insurance Act wasanmended

In1968, the Insurance Act was

amended to regulate investments
and set minimum solvency
margins. The Tariff Advisory
Committee was also set up then.
 1973
General insurance business
was nationalized

In1972 with the passing of the

General Insurance Business
(Nationalisation) Act, general
insurance business was
nationalized with effect from lst
January,1973. 107 insurers were
amalgamated and grouped into
four conmpanies, namely National
Insurance Company Ltd, the New
India Assurance Company Ltd.,
the Oriental Insurance Company
Ltd and the United India Insurance
Company Ltd. The General
Insurance Corporation of India
was incorporated as a company
in 1971 and it commence business
on January lst 1973.
The process of re-opening

This millennium has seen insurance come a

full circle in a journey extending to nearly
200years. The process of re-opening of the
sector had begun in the early 1990s and the
last decade and more has seen it been
opened up substantially. In 1993, the
Government set up a committee under the
chairmanship of RN Malhotra, former
Governor of RBI, to propOse
recommendations for reforms in the
insurance sector.The objective was to
complement the reforms initiated in the
financial sector. The committee submitted
its report in 1994 wherein,among other
things, it recommended that the private
sector be permitted to enter the insurance
industry. They stated that foreign
companies be allowed to enter by floating
Indian companies, preferably a joint venture
with Indian partners.
 April, 2000
The IRDA Was incorporated as
a statutory body
Following the recommendations
of the Malhotra Committee report,
in 1999,the Insurance Regulatory
and Development Authority (IRDA)
Was constituted as an
autonomous body to regulate and
develop the insurance industry.
The IRDA Was incorporated as a
statutory body in April, 2000. The
key objectives of the IRDA include
promotion of competition so as to
enhance customer satisfaction
through increased consumer
choice and lower premiums, while
ensuringthe financial security of
the insurance market.
August 2000
The IRDAopened up the
market

The IRDAopened up the market in

August 2000 with the invitation for
application for registrations.
Foreign companies were allowed
ownership of up to 26%. The
Authority has the power to frame
regulations under Section l14A of
the Insurance Act, 1938 and has
from 2000 onwards framed

various regulations ranging from

registrationof companies for
Carrying on insurance business to
protection of policyholders'
interests.
December, 2000
the subsidiaries of the General
Insurance Corporation of
India were restructured as
independent companies
In December, 2000, the
subsidiaries of the General

Insurance Corporation of India

were restructuredas independent
companies and at the same time
GIC was converted into a national
re-insurer.
re-insurer.

July, 2002
Parliamnent passed a bill de
linking the four subsidiaries
from GIC inJuly, 2002.

Today there are 34 general

insurance companies including
the ECGCand Agriculture
Insurance Corporation of India
and 24 life insurance companies
operating in the country.
The insurance sector is a colossal
one and is growing at a speedy
rate of 15-20%.Together with
banking services, insurance
services add about 7% to the
country's GDP. Awell-developed
and evolved insurance sector is a
boon for economic development
as it provides long- term funds for
infrastructure development at the
same time strengthening the risk
taking ability of the country.
History of IRDAI

IRDAIwas established in 2000 as a

standalone body that can regulate the
insurance sector in India. This happened
after the Malhotra Committee Report in
1999. In August 2000, the insurance
companies started sendingtheir
applications to get registered with IRDAI and
then allowed companies from different
countries to invest up to 26% in the market.

IRDAI made certain rules and regulations

under the Insurance ACT 1938, Section
114A. IRDAImakes sure that the insurance
companies get registered to operate in the
country and protect their policyholder's
interests.
Objectives of IRDAI
The main objective of IRDAlis to make sure
that the provisions under the Insurance Act
are being followed. IRDAIhas some mission
statements and they are asfollows:

" Protection of the policyholder's interest

and fair treatment

" To ensure financial solidity and regulate

the insurance industry impartially

"To make regular changes to ensure that

the industry operated without any
obscurity
Some important rules of IRDAlare as
follows:

"Protect the policyholder's interests

" For the benefit of the policyholder, to

make sure that the insurance industry is
growing properly

" In order to speed up the nation's economy,

to provide long-term funds to the people

" To make sure that the claims get settled

fast and without any injustice

"Setting up a grievance redress forum to

register and resolve the complaints
" To make sure no insurance provider

practices any kind of fraud or malpractige

" To ensure that insurance companies stay
transparent and fair with their customers
and practice systematic conduct of
ineurance in the nmarket
IRDAI SEBI

Regulation of the Regulation of security

Insurance industry and commodity
sectorS

Estalishment: 1999 Establishment: 1992

Protects Protects investor's

policyholder's security interests

interests

Grant Registration Grant Registration

Certificates to the Certificate to the
new insurance stockbrokers, sub
companies brokers, bankers to
issue deeds.

Shaping of rules & Shaping of rules &

regulations under regulations under
IRDAI Act of India SEBI Act of India