The legislation passed by the Lok Sabha in the insurance sector spells out the role of the regulator in some detail
Composition of the insurance regulator: The regulator will be called the Insurance Regulatory and Development Authority, and will have a head office at such place as decided by the central government.
It will comprise a chairperson, and a maximum of five whole-time members and four part-time members chosen by the central government, and their tenure will be for five years. The retirement age of the chairperson will be 65, while that for whole-time members will be 62.
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The government has the powers to remove any member from office for conviction of an offence, or abuse of office, etc.
The chairperson and the whole-time members are barred for a period of two years from the date they cease to hold office to accept employment under the central government or state government, or in any company in the insurance sector, except with the prior approval of the central government.
Powers and functions of the regulator: The IRDA has the duty to regulate, promote and ensure orderly growth of the insurance and re-insurance business in the country.
The powers and functions of the IRDA are the following: issue to the applicant a certificate of registration, renew, modify, withdraw, suspend or cancel such registration.; protection of 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.
Its other functions are specifying requisite qualifications, code of conduct and practical training for intermediary or insurance intermediaries and agents; specifying the code of conduct for surveyors and loss assessors and promoting efficiency in the conduct of business.
It will also be promoting and regulating professional organisations connected with the insurance and re-insurance business; levying fees and other charges for carrying out the purposes of the IRDA Act.
Still others include calling for information from, undertaking inspection of, conducting inquiries and investigations including audit of insurers, intermediaries, insurance intermediaries and other organisations connected with the insurance business; control and regulation of the rates, advantages, terms and conditions that may be offered by insurers in respect of general insurance business not so controlled and regulated by the Tariff Advisory Committee under Section 64U of the Insurance Act, 1938.
Its powers include specifying the form and manner in which books of accounts shall be maintained and statement of accounts rendered by insurers and other insurance intermediaries; regulating investment of funds by insurance companies; regulating maintenance of margin of solvency and adjudication of disputes between insurers and intermediaries or insurance intermediaries. Its other powers are supervising the functioning of the TAC; specifying the percentage of premium income of the insurer to finance schemes for promoting and regulating professional organisations; specifying the percentage of life insurance and general insurance business to be undertaken by the insurer in the rural or social sector; and exercising other powers as may be prescribed.
Finance and accounts of IRDA: The central government will give grants to the IRDA through the constitution of a fund called the Insurance Regulatory and Development Authority Fund. The fund will meet the salaries and other remuneration of the staff of the IRDA and other expenses of the authority. The accounts of the authority will be audited by the Comptroller and Auditor General of India.