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CHANAKYA NATIONAL LAW UNIVERSITY

A PROJECT

ON
INSURANCE REGULATORY AND DEVELOPMENT AUTHORITY''S
CONTROL OVER SECTOR WISE DISTRIBUTION OF INSURANCE
BUSINESS

Subject: - insurance

Submitted To: - Dr. Shaiwal satyarthi

Submitted By: -bhanu pratap

Roll No: 921

8 semester,4 year
th TH
ACKNOWLEDGEMENT
Apart from the efforts of the researcher, the success of any project depends largely on the
encouragement and guidelines of many others. I take this opportunity to express my gratitude
to the people who have been instrumental in the successful completion of this project. I would
like to show my greatest appreciation to Dr. Shaiwal Satyarthi. I can’t say thank you enough
for his tremendous support and help. I feel motivated and encouraged every time I attend his
lectures. Without his encouragement and guidance this project would not have materialized.
The guidance and support received from all the members who contributed and who are
contributing to this project, was vital for the success of the project.

I am grateful for their constant support and help. I am thankful to my librarians, who
provided me the books and materials required for the completion. I am grateful to all my
friends, from whom I got the meticulous comments and suggestions which proved very
beneficiary in the completion of this project.

Finally, I am thankful to all those individuals and institutions that directly and indirectly
provided me the materials which helped me to complete this project.
TABLE OF CONTENT
ACKNOWLEDGEMENT .........................................................................................................2

RESEARCH METHODOLOGY...............................................................................................4

Objectives of the study: ..........................................................................................................4

Source of Data: .......................................................................................................................4

Limitations: ............................................................................................................................4

Style of Writing and Mode of Citation: .................................................................................4

Hypothesis: .............................................................................................................................4

1. INTRODUCTION .................................................................................................................5

2. INSURANCE REGULATORY AND DEVELOPMENT AUTHORITY: AN OVERVIEW


................................................................................................................................................7-8

Composition of IRDA: ...........................................................................................................9

The duties, powers and functions of IRDA have been specified under Section 14: ..............9

3. SECTOR WISE DISTRIBUTION OF INSURANCE BUSINESS ....................................11

(A) LIFE INSURANCE : .....................................................................................................11

(B) GENERAL INSURANCE .............................................................................................11

Major players in insurance Sector in India...........................................................................13

4. IRDA'S CONTROL OVER SECTOR WISE INSURANCE BUSINESS ..........................15

5. CONCLUSION ....................................................................................................................20

BIBLIOGRAPHY ....................................................................................................................21

Page 3
RESEARCH METHODOLOGY

Objectives of the study:

Following are the main objectives of the present study.


1. To know the powers and functions of the IRDA
2. To study the impact of IRDA on the growth of life and non-life insurers in India.
3. To examine the control of IRDA on sector wise insurance business.

Source of Data:

The present work entitled “Control of IRDA on Sector wise Insurance Business in India” is
based on secondary data. The sources of data were collected from annual reports of the
IRDA, LIC, RBI Bulletins, Economic surveys and other annual reports of the non-banking
financial institutions. The data collected for the study were processed and analyzed by
using suitable statistical technique.

Limitations:

In the interests of Brevity and Focus, the paper has been narrowly restricted to making an
argument on the above issue and the authorities cited have been selected as such.

Style of Writing and Mode of Citation:

An Comparative and Analytical style of writing has been adopted through the paper.
Bluebook citation has been followed.

Hypothesis:

This paper is based on the following hypothesis :


“That the Insurance Regulatory Development Authority has been consistent and efficient in
performing its regulatory function. That the IRDA has control over the running of Insurance
business of different the Insurance Sectors ”

Page 4
1. INTRODUCTION

IRDA is a statutory body that regulates the insurance sector in India, to protect the
interests of policyholders, while ensuring growth of the insurance industry. Life is
unpredictable and loss of life can negatively affect families and everyone involved, especially
if the deceased happens to be the sole bread winner. Life insurance provides financial
security and protection against loss of income that would result if the insured passed away.
IRDA has set out new regulations pertaining to non-linked insurance policies (also known as
traditional policies) to benefit policyholders. They were formulated with an aim to improve
and standardize insurance processes and for protecting the interests of insurance customers.
The regulatory changes encompass multiple areas including changes in structure for
minimum death benefit, surrender value payment, use of latest mortality tables and
commission structures.1

The Insurance sector in India has gone through a number of phases and changes,
particularly in the recent years when the Government of India in 1999 opened up the
insurance sector by allowing private companies to solicit insurance. Ever since, the Indian
insurance sector is considered as a booming market with every other global insurance
company wanting to have a lion's share.

The story of insurance is probably as old as the story of mankind. The same instinct
that prompts modern businessmen today to secure themselves against loss and disaster
existed in primitive men also. They too sought to avert the evil consequences of fire and
flood and loss of life; and were willing to make some sort of sacrifice to achieve security. For
example, if a house burned down, the members of the community helped build a new one.
This type of insurance has survived to the present day, especially in tribal society.2

The earliest form of insurance was in the nature of Marine Insurance. The early
methods of transferring or distributing risk were practiced by Chinese and Babylonian
traders. Whereas the Chinese merchants redistributed their wares across many vessels to limit
the loss, traversing precarious rivers, the Babylonians practiced a system (recorded in the
Code of Hammurabi, 1750 BC) of paying the lender an additional sum in exchange for the
1
V Srinivas, Ramanathan V, "Impact of New IRDA Regulations", Tata Consultancy Services, 2014
2
Leela Ram Newar, "Understanding Reforms in the Life Insurance Sector of India", IJCAES Special Issue On
Basic, Applied & Social Sciences, Volume III, January 201, [ISSN: 2231-4946]

Page 5
lender's guarantee to cancel the loan should the shipment be stolen. The Greeks and Romans
introduced the origins of health and life insurance in 600 AD when they organized guilds
called "benevolent societies" which cared for the families and paid funeral expenses of
members upon death.

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. The word “Yogagshema” used in Rig Veda suggests that
some form of community insurance was carried on by the Aryans in our country well over
3000 years ago. The existence of burial societies during the Buddhist Period also
acknowledges the existence of insurance which used to help the family of a deceased person
by building a house and protecting the widows. Ancient Indian history has also preserved the
earliest traces of insurance in the form of marine trade loans and carriers‟ contracts.3

The primary legislations that deal with insurance business in India are Insurance Act,
1938 and Insurance Regulatory & Development Authority Act, 1999. With the end of
government monopoly and passing of the Insurance Regulatory and Development Authority
(IRDA) Act, 1999, there has been a revolution in the Indian insurance sector. The IRDA
since its incorporation as a statutory body in April 2000 has fastidiously stuck to its schedule
of framing regulations and registering the private sector insurance companies.

3
Ibid.
2. INSURANCE REGULATORY AND DEVELOPMENT
AUTHORITY: AN OVERVIEW

Insurance Regulatory and Development Authority (IRDA) is an autonomous apex statutory


body which regulates and develops the insurance industry in India. It was constituted by a
parliament of India act called Insurance Regulatory and Development Authority Act, 1999 4

and duly passed by the Government of India 5 .The agency operates its headquarters at

Hydrabad, Andhra Pradesh where it shifted from Delhi in 2001.6 Promote and ensure orderly
growth of the insurance business and re-insurance business. IRDA issue the applicant a
certificate of registration, renew, modify, withdraw, suspend or cancel such registration and
Protect the interests of the policy holders in matters concerning assigning of policy,
nomination by policy holders, insurable interest, settlement of insurance claim, surrender
value of policy and other terms and conditions of contracts of insurance. Further, it regulates
investment of funds by insurance companies, regulating maintenance of margin of solvency,
adjudication of disputes between insurers and intermediaries or insurance intermediaries.

The IRDA Act, 1999 was passed as per the major recommendation of the Malhotra
Committee report (1994) which recommended the establishment of an independent regulatory
authority for insurance sector in India. Later, it was incorporated as a statutory body in April,
2000. The IRDA Act, 1999 also allows private players to enter the insurance sector in India

4
GOI. "IRDA ACT 1999". GOI. Source:
http://india.gov.in/outerwin.php?id=http://indiacode.nic.in/fullact1.asp?tfnm=199941, Retrieved 19 June 2012.
5
PTI (Nov 21, 2001). "IRDA to shift HQ to Hyderabad by Feb". The Times of India. Source:
http://timesofindia.indiatimes.com/business/india-business/IRDA-to-shift-HQ-to-Hyderabad-by-
Feb/articleshow/281974863.cms?referral=PM, Retrieved April 20, 2015.
6.
GOI. "IRDAACT 1999" (PDF).DepartmentofFinancialServices,GOI.Source:
http://india.gov.in/outerwin.php?id=http://indiacode.nic.in/fullact1.asp?tfnm=199941, Retrieved April 20, 2015.

Page 7
besides a maximum foreign equity of 26 per cent7 in a private insurance company having
operations in India. The FDI limit in insurance sector was raised to 49% in July 2014.8

Considering some of the emerging requirements of the Indian insurance industry,


IRDA was amended in 2002. As stated in the act mission of IRDA is "to protect the interests
of the policyholders, to regulate, promote and ensure orderly growth of the insurance industry
and for matters connected therewith or incidental thereto." Indian insurance industry is
regulated by the terms and conditions of the IRDA. Indian law has certain expectations from
the IRDA to perform in the Indian insurance industry. IRDA should protect the interest of
policyholders by ensuring fair treatment by the insurance companies. The growth of
insurance companies in a speedy and orderly manner should be taken care by the IRDA. It
should monitor and implement quality competence and fair dealing of the insurance
companies in the industry. IRDA should make sure that the insurers are providing precise and
correct information about the products offered by them for the insurance customers. IRDA
should also ensure speedy settlement of genuine claims of the policyholders and prevent
malpractices in the process of claims settlement. IRDA controls all the Insurance business in
India. They are setting structure and boundaries for the insurance companies to act upon.
Starting from licensing to approving the products, IRDA directs the companies in India. They
also protect customer interests in the country. As per current guidelines issued by IRDA,
Insurance Companies are not permitted to invest in Indian Depository Receipts (IDR), while
they are permitted to invest in Equity shares/ Bonds/ Debentures. IRDA needs to remove this
disparity to open up investment opportunity by Insurance Companies and thereby also
enhance the liquidity of IDRs (Contributed by Sanjay Banka, FCA FCS) Hence, the present
work made an attempt to study the Role of IRDA in Indian Insurance sector.

7.http://www.thehindu.com/business/Industry/irda-chief-bats-for-49-per-cent-fdi/article3961702.ece "IRDA
chief bats for 49 per cent FDI". The Hindu. 4 October 2012. Source:
http://www.thehindu.com/business/Industry/irda-chief-bats-for-49-per-cent-fdi/article3961702.ece, Retrieved 20
April, 2015.
8. http://timesofindia.indiatimes.com/business/india-business/Govt-allows-100-FDI-in-telecom-hikes-insurance-
cap-to-49/articleshow/21106372.cms 8 "Govt allows 100% FDI in telecom, hikes insurance cap to 49%". Times
of India. 16 July 2013. Source: http://timesofindia.indiatimes.com/business/india-business/Govt-allows-100-
FDI-in-telecom-hikes-insurance-cap-to-49/articleshow/21106372.cms, Retrieved 20 April 2015.
Page 8
Composition of IRDA:

As per the section 4 of IRDA Act' 1999, Insurance Regulatory and Development Authority
(IRDA, which was constituted by an act of parliament) specify the composition of
Authority.9 IRDAI is a ten member body consisting of:
 A Chairman,(T.S. Vijayan) 

 Five whole-time members,-(R.K. Nair,M. Ram Prasad,S. Roy Chowdhary,D.D. Singh) 

 Four part-time members,-(Anup Wadhawan,S.B. Mathur,Prof. V.K.Gupta,CA. Subodh
Kr. Agarwal) 

All members are appointed by the Government of India.10 

The duties, powers and functions of IRDA have been specified under Section 1411:

The IRDA Authority 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.

Without prejudice to the generality of the provisions contained in sub-section (1) of


IRDA Act, the powers and functions of the Authority shall include:

 Issuing a certificate of registration to the applicant as well as modify, renew, withdraw,


suspend or cancel any such registration that is deemed unfit. 

 Protecting the interests of the policyholders in matters concerning assigning of insurance
policy, nomination by policyholders, settlement of insurance claim, insurable interest,
surrender value of policy and other terms and conditions based on contracts of insurance. 

 Specifying requisite qualifications, practical training and code of conduct for insurance
intermediaries, insurance brokers and agents. 

 Specifying the code of conduct for surveyors and loss assessors. 

 Promotion of efficiency in the conduct of insurance business. 

 Promoting and regulating professional organizations connected with the insurance and re-
insurance business across India. 

9.http://www.irda.gov.in/ADMINCMS/cms/NormalData_Layout.aspx?page=PageNo100&mid=1.
1 "Composition of Authority". Insurance Regulatory and Development Authority. Source:
https://www.irda.gov.in/ADMINCMS/cms/NormalData_Layout.aspx?page=PageNo100&mid=1.1,
Retrieved April 20, 25.
10
Ibid
11
IRDA Act, 1999 Page 9
 Levying fees, commission and other charges for carrying out the purposes of this Act. 

 Calling for data or information from, undertaking inspection of, conducting enquiries and
investigations, conducting audit of the insurers, intermediaries, insurance intermediaries and
other organizations connected with the insurance business. 

 Under section 64U of the Insurance Act, 1938 (4 of 1938), controlling and regulation of the
rates, advantages, terms and conditions etc that may be offered by insurers (or Insurance
Companies) in respect of general insurance business not so controlled and regulated by the
Tariff Advisory Committee. 

 Specifying the manner and form in which books of account shall be maintained and statement
of accounts, financial statements etc shall be rendered by insurers and other insurance
intermediaries. 

 Keeping a tab, exercising control and regulating investment of funds by insurance companies. 


 Regulating the maintenance of margin of solvency by the Insurers. 

 Adjudication of disputes between insurers and intermediaries or insurance intermediaries,
hospitals, healthcare organizations or with customers. 

 To effectively supervise the functioning of the Tariff Advisory Committee. 

 Specifying the percentage of premium income of the insurer to finance schemes for
promoting and regulating professional organizations referred to in clause (f); 

 Specifying the percentage of life insurance business and general (or non-life) insurance
business to be undertaken by the insurance company in the rural or social sector. 

 Exercising any such other powers that may be prescribed with passage of time.12 

12
IRDA's Role, Source: http://www.maxlifeinsurance.com/insurance-explained/Role-Of-IRDAI.aspx, Retrieved
on 20 April, 2015.

Page 10
3. SECTOR WISE DISTRIBUTION OF INSURANCE
BUSINESS

The insurance industry of India consists of 52 insurance companies of which 24 are in


life insurance business and 28 are non-life insurers. Among the life insurers, Life Insurance
Corporation (LIC) is the sole public sector company. Apart from that, among the non-life
insurers there are six public sector insurers. In addition to these, there is sole national re-
insurer, namely, General Insurance Corporation of India. Other stakeholders in Indian
Insurance market include agents (individual and corporate), brokers, surveyors and third
party administrators servicing health insurance claims.

Out of 28 non-life insurance companies, five private sector insurers are registered to
underwrite policies exclusively in health, personal accident and travel insurance segments.
They are Star Health and Allied Insurance Company Ltd, Apollo Munich Health Insurance
Company Ltd, Max Bupa Health Insurance Company Ltd, Religare Health Insurance
Company Ltd and Cigna TTK Health Insurance Company Ltd. There are two more
specialised insurers belonging to public sector, namely, Export Credit Guarantee Corporation
of India for Credit Insurance and Agriculture Insurance Company Ltd for crop insurance.

(A) LIFE INSURANCE :


 Term Life Insurance 

 Permanent Life Insurance 

(B) GENERAL INSURANCE
 Fire Insurance 

 Marine Insurance 

 Accident Insurance 

(A)Life Insurance
Life Insurance is a contract providing for payment of a sum of money to the person assured
or, following him to the person entitled to receive the same, on the happening of a certain
event. It is a good method to protect your family financially, in case of death, by providing
funds for the loss of income.

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A1. TERM LIFE INSURANCE : Under a Term Life contract, the insurance company pays a
specific lump sum to the designated beneficiary in case of the death of the insured. These
policies are usually for 5, 10, 15, 20 or 30 years.

Term life insurance are the most popular in advance countries but were not so popular in
India. However, after the entry of the private operators and aggressive marketing by few
players this kind of policies are becoming popular. The premium on such type of policies is
comparatively quite low when compared with other types of life insurance policies, mainly
due to the fact that these policies do not carry cash value.

PLUS OF TERM LIFE INSURANCE MINUSES OF TERM LIFE INSURANCE


- If one survives the period of the policy, he /
she does not get any money at the end of the
- The premium payable on these policies ispolicy.
low as they do not carry any cash value. The premium on such policies keeps on
- One can afford for quite high value insurance increasing with age mainly because the risk of
policies death of older people is more. Over the page
of 60, these policies become difficult to
afford.

A2. PERMANENT LIFE INSURANCE :


In a Permanent Life contract, a portion of the money paid as premiums is invested in a
fund that earns interest on a tax-deferred basis. Thus, over a period of time, this policy will
accumulate certain "cash value" which you will be able to get back either during the period of
the policy or at the end of the policy.
Your need for life insurance can change over a lifetime. At any age, you should consider your
individual circumstances and the standard of living you wish to maintain for your dependents. In
most cases, you need life insurance only if someone depends on you for support. Your life
insurance premium is based on the type of insurance you buy, the amount you buy and your
chance of death while the policy is in effect. This type of policy not only provides protection for
your dependents by paying a death benefit to your designated beneficiary upon your death, but it
also allows you to use some part of the money while you are alive or at the end

Page 12
of the policy. Some examples of such policies are :- Whole Life, Universal Life and Variable-
Universal Life.

ENDOWMENT POLICIES
These policies provide for period payment of premiums and a lump sum amount either in the
event of death of the insured or on the date of expiry of the policy, whichever occurs earlier.

MONEY BACK POLICIES


These policies provide for periodic payments of partial survival benefits during the term of
the policy itself. A unique feature associated with this type of policies is that in the event of
death of the insured during the policy term, the designated beneficiary will get the full sum
assured without deducting any of the survival benefit amounts, which have already been paid
as money-back components. Moreover, the bonus on such policies is also calculated on the
full sum assured.

ANNUITY / PENSION POLICIES / FUNDS


This policies / funds require the insured to pay the premium as a single lump sum or through
instalments paid over a certain number of years. The insured in return will receive back a
specific sum periodically from a specified date onwards (the returns can can be monthly, half
yearly or annually), either for life or for a fixed number of years. In case of the death of the
insured, or after the fixed annuity period expires for annuity payments, the invested annuity
fund is refunded, usually with some additional amounts as per the terms of the policy.
Annuities / Pension funds are different from from all other forms of life insurance as an
annuity policy / fund does not provide any life insurance cover but merely offers a guaranteed
income either for life or a certain period. Therefore, this type of insurance is taken so as to
get income after the retirement.

Major players in insurance Sector in India


Till 01.04.2000, Insurance industry in India comprised mainly of only two state insurers
namely :-
Life Insurers:
 Life Insurance Corporation of India (LIC) 


Page 13
General Insurers:
 General Insurance Corporation of India (GIC) (with effect from December, 2000, it has been
made a National Reinsurer 

GIC had four subsidary companies, namely :-


1. The Oriental Insurance Company Limited
2. The New India Assurance Company Limited,
3. National Insurance Company Limited
4. United India Insurance Company Limited.
(However, with effect from Dec 2000, these subsidiaries have been de-linked from the
parent company and made as independent insurance companies).

In addition to above state insurers the following have been permitted to enter into insurance
business :-
Life insurers
 HDFC Standard Life Insurance Company Ltd. 

 FC Standard Life Insurance Company Ltd. 

 Max New York Life Insurance Co. Ltd. 

 Tata AIG Life Insurance Company Ltd. 

 SBING Vysya Life Insurance Company Private LimitedI Life Insurance Company
Limited . 

 Allianz Bajaj Life Insurance Company Ltd. 

 Metlife India Insurance Company Pvt. Ltd. 

 AMP SANMAR Assurance Company Ltd. 

 Dabur CGU Life Insurance Company Pvt. Ltd. 

General Insurers:
 Royal Sundaram Alliance Insurance Company Limited 

 Reliance General Insurance Company Limited. 

 IFFCO Tokio General Insurance Co. Ltd 

 TATA AIG General Insurance Company Ltd. 

 Bajaj Allianz General Insurance Company Limited 

Page 14
4. IRDA'S CONTROL OVER SECTOR WISE INSURANCE
BUSINESS

I. Control in the Rural And Social Sector: The Regulations framed by the Authority on the
obligations of the insurers towards rural and social sector stipulated targets to be fulfilled by
insurers on an annual basis. In terms of these regulations, insurers are required to cover year
wise prescribed targets (i) in terms of number of lives under social obligations; and (ii) year
wise prescribed targets in terms of percentage of policies to be underwritten and percentage
of total gross premium income written direct by the life and non-life insurers respectively
under rural obligations. The regulations require insurers to underwrite business in these
segments based on the year of commencement of their operations and the applicable targets
are linked to the year of operations of each insurer. For meeting these obligations, the
regulations further provide that, if an insurance company commences operations in the
second half of the financial year and is in operations for less than six months as at 31st March
of the relevant financial year (i) no rural or social sector obligations shall be applicable for
the said period; and (ii) the annual obligations as indicated in the Regulations shall be
reckoned from the next financial year which shall be considered as the first year of operations
for the purpose of compliance. In cases where an insurance company commences operations
in the first half of the financial year, the applicable obligations for the first year shall be 50
per cent of the obligations as specified in these Regulations.

II. Control Over Regulation of Insurance Sector: There is great impact of IRDA in the overall
regulation of the India Insurance sector. The IRDA is having close observation over the
different activities of insurance sector in India in order to ensure the proper protection of the
policyholders' interests and scope of regulation is constantly increasing.

III. Impact Over Policyholders Interests Protection: As far as the matter of protection of
policyholders' interests is concerned, it is the core objective of the IRDA and IRDA is also
trying its level best in this context. Thus, it is clear that the impact of IRDA over
policyholders' interests' protection is significant.

IV. Impact Over Awareness to Insurance: IRDA is not only emphasizing over the
introduction of different rules and regulations in the insurance sector in order to protect the

Page 15
interests of policyholders but also it is trying to make the activities of insurance sector
transparent and taking different steps so as to increase the awareness of the society to the
insurance
V. Impact Over Customers Education: IRDA is attempting to make all the significant and
material information associated with insurance products public and it has also made
mandatory for the insurers to disclose all the secret information to the customers.
VI. Impact Over Insurance Market: The impact of IRDA over the insurance market is not
hidden to any one of us. There is a great change in the insurance market whether with respect
to insurance product, marketing, competition and customers' awareness.
VII. Impact Over Development of Insurance Product: One of the significant impacts of IRDA
amongst its different impacts over the insurance sector is its impact over the development of
insurance products. The IRDA has brought a revolution in the direction of development of
insurance products. The development of ULIPs is the outcome of privatization of the
insurance sector.
VIII. Impact Over Distribution Channel (Insurance Intermediaries) of Insurance Product: It is
very natural phenomena that only good distribution (demand) can sustain the constant
production (product development). Thus, IRDA has also given due attention towards the
development of insurance intermediaries (Distribution Channel) in order to make available
insurance to everyone.
IX. Impact Over Life Insurance Corporation of India: Life Insurance Corporation of India
was a single player in the life insurance sector prior to the introduction of the IRDA and LIC
of India had monopoly over the life insurance market. But now, there are twenty three other
private life insurers apart from the LIC of India the existing life insurance market, therefore,
the LIC of India has to make it so strong that it may compete with its rivals and secure its
previous position in the market.
X. Impact Over Insurance Objective: The introduction of private players in the insurance
sector has made the insurance sector diversified, dynamic and competitive, which has also
brought an amazing change in the trends of policyholders and as a result insurance objective
for the people of the society has been thoroughly changed.
XI. Impact Over Competition in the Insurance Sector: There was no competition term in the
insurance market prior to the introduction of private players in the life insurance sector. It is a
natural impact over insurance sector. Competition in the existing insurance market is
gradually increasing.
Page 16
XII. Impact Over Expenses of Insurers: There was nothing like competition in the insurance
market before the introduction of private companies in the life insurance sector and as a result
there was no need to expend huge money over different activities related to the insurance
except over some fixed activities. Thus, competition has brought a great change in the
expenditure size of the insurers.
XIII. Impact Over Contents of Insurance Product (Multipurpose Insurance Product): At the
outset, insurance was concerned with insurance not any other issue or requirement. But in the
present market, insurance products are being designed and developed so that they may cater
different other as much as the needs of the prospective customers apart from the core need of
the insurance.
XIV. Impact Over Workforce (Employment Opportunity of Insurance Sector) A gradual
increase in the number of insurers in the insurance sector is creating competition amongst
pre-existing insurers and this trend directly or indirectly demands a large workforce.
XV. Impact Over the Applied Technology in the Insurance Sector Present age is the age of
technology, so, normal usage of technology in the different activities of the insurance sector
is quite natural but day by day introduction of different advanced technology in the insurance
sector is motivated by the competition.
XVI. Impact Over Service and Facility Insurers As far as impact over services and facilities
of insurers is concerned, it is worth mentioning, particularly with respect to pre existing
insurers. Thus, the impact of IRDA over the services and facilities of insurers is good. XVII.
Impact Over Procedure of Insurance Nowadays, getting insured has become very easy and it
is available on the doorstep. Previously it was not as easy as it is today. Thus, as an important
impact of IRDA, procedure of insurance has become very simple.
XVIII. Impact Over Saving and Investment Portfolio of Individual Today’s, insurance has
become so popular and profitable mode of investment amongst the people of society that it
has made a permanent place in the saving and investment portfolio of every one of us and in
the absence of investment in the insurance, portfolio is not considered good.
XIX. Impact Over Selection Procedure of Insurance Agent It was very easy to be an
insurance agent for anyone prior to the introduction of the IRDA. But now, it is not a simple
task and it has become too difficult, expensive and lengthy task and even it is not possible for
everyone.
XX. Impact Over Pressure and Workload of Insurance Employee and Officers The
introduction of private sector companies in the insurance sector has infused the element of
Page 17
competition in the insurance sector and as a result pressure over the officers and employees
of the existing insurance companies goes up and it is an endless process.
XXI. Impact Over Number of Insurers As a result of the introduction of the IRDA in the
insurance sector, private players got an opportunity to deal with insurance products in the
Indian Insurance Market. India is one of the largest markets of the world and number of the
insured persons is very nominal. Thus, there are numerous opportunities of development for
the private insurers in the Indian Insurance Market and this is why a number of insurers are
gradually increasing.

XXII. Impact Over Organisation Structure of Insurers First of all, Introduction of IRDA has
invited private players in the insurance sector and secondly it has imposed certain obligations
over the insurers, which have forced the existing insurers to make changes in their
organizational structures in order to carry out instructions and fulfilling the obligations.13
XXIII. Impact Over Regulation Requirement in the Indian Insurance Sector There is great
need of a proper regulatory system in the present Indian Insurance Market in order to protect
the interests of the policyholders at large and ensuring the proper functioning of the insurance
sector. The lack of proper regulation in the insurance sector might be a big challenge to the
future of the nation and citizen as well. Therefore, at present proper and systematic regulation
is very essential for the smooth operation of the insurance sector.14
XXIV. Impact Over Government Responsibility Regular increase in the number of insurers,
the number of diversified products launched by them, increasing competition in the insurance
sector, a huge amount of many individuals deposited with different insurers in the form of
premiums and diversified activities of the insurers is making the government responsible to
bring uniformity in the insurance sector.
XXV. Impact Over Banks and Post Offices Today, insurance is not only a means of security
from risks or uncertainties but also it is one of the most popular and common mode of saving
and investment. It is the result of the activities of the present insurance market, which has
diverted the flow of fund from the banks and post offices to the insurance industry.
XXVI. Impact Over Challenges of Insurance Agent The introduction of many insurers in the
insurance sector has increased the problems and challenges of the insurance agents. They
have to devote their more time and resources in order to fulfil their target.

13
Insurance Regulatory Development Authority Act - Peter Lancett
14
Annual Report of IRDA 2009-10

Page 18
XXVII. Impact Over Individual Life’s The IRDA has put a great impression over the life of a
common person of the society by way of developing an understanding of the insurance and
creating a sense of responsibility among them.
XXVIII. Impact Over Selection of Different Alternative Source of Saving and Investment
The introduction of IRDA has opened up Indian Insurance Sector to the private players and it
has created a competition in the insurance sector and as a result of competition amongst the
insurers, different types of insurance products have been launched in the present insurance
market, which have taken a form of alternative sources of saving and investment. Thus, it has
affected the selection of different sources of saving and investment.
XXIX. Impact Over Share Market Unit Linked Insurance Plans are result of the modern
insurance market, which have been developed by the private insurers particularly to attract
the customer towards them. This insurance product has made simple to raise funds by the
companies and it has indirectly attached many people of the society to the activities of share
market.
XXX. Impact Over Sale Insurance Policies Increased numbers of insurers are also doing their
level best to get their business along with existing insurers. Every insurer has its own market
and hence, the insurance business is constantly growing up.
XXXI. Impact Over Indian Economy Every economic activity in the country adds something
more or less to the development of economy. Money invested in different types of insurance
products in the form of premiums channelize the funds of a country for non-economic
activity to economic activity and above all it makes available to the governments of a country
in order to execute the different development related activities of the country. Thus, there is a
great impact of IRDA in the economic development of the country
XXXII. Conclusion The creation of IRDA has brought revolutionary changes in Insurance
sector In the last 10 years of its establishment the Insurance sector has seen tremendous
growth when IRDA come into beginning only players in the Insurance industry where life
Insurance Corporation (LIC) and General Insurance Company of India (GIC) however in the
last decade 23 new players have emerged in the field of Insurance. The IRDA also
successfully deals with any discrepancy in the Insurance sector.15

15
Dr. Bhawana Rewadikar, Sumit Soni, " International Journal of Advance Research in Computer Science
and Management Studies", Volume 1, Issue 3, August 2013 pg. 26-30
Page 19
5. CONCLUSION

The IRDA being a National agency of the Government of India, there are numerous
arrangements for taking corrective steps as to incorporate the emerging requirement of the
Insurance sector in India.

The creation of IRDA has brought revolutionary changes in Insurance sector. In the
last 10 years of its establishment the Insurance sector has seen tremendous growth when
IRDA come into beginning only players in the Insurance industry where life Insurance
Corporation (LIC) and General Insurance Company of India (GIC) however in the last
decade 23 new players have emerged in the field of Insurance. The IRDA also successfully
deals with any discrepancy in the Insurance sector and has been efficient in controlling the
sector wise insurance business in the country .

The establishment of IRDA has helped the insurance industry as a whole. Firstly, by
providing an authority which can regulate the conduct of several insurance market players.
Secondly, it monitors the policies and hence, benefits the insured people in general by
keeping a check of any irregularities taking place in the insurance sector. Thirdly, IRDA, by
issuing several notifications has ensured that the interest of the consumers remain intact and
their interest do not suffer.

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BIBLIOGRAPHY

BOOKS:

1. Taxmann's Regulations Framed Under Insurance Regulatory & Development


Authority Act, Taxmann Allied Services, 2000

2. McGee, The Modern Law of Insurance, Indian Reprint, edn. 3rd, Haryana,
LexisNexis, 2011.

3. Murthy, KSN; KVS Sarma, Modern Law of Insurance in India, edn. 5th,
Haryana, LexisNexis, 2014.

4. Rao, S V Joga, M N Srinivasan’s Principles of Insurance Law, edn. 9th,


Nagpur, LexisNexis Butterworths Wadhwa, 2009.

STATUTES:
1. Insurance Regulatory and Development Act, 1999

2. Indian Insurance Act, 1938

WEBSITES:

1. https://www.irda.gov.in

2. http://www.irdaonline.org/