IRDA Full Form Name: IRDA Meaning
Full
Form of IRDA :
Insurance
Regulatory and Development Authority of India
RDA
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.