Before the Insurance Regulatory Development Authority of India (IRDAI), insurance was regulated under the Insurance Act 1938. Over the years, various amendments were passed to ensure that insurance business is appropriately regulated. There were several laws and regulations which were passed after 1938. In the mid-1950s, insurance companies were nationalized. This also included the nationalization of the Life Insurance Corporation of India (LIC). Mainly all life insurance businesses would come under the ambit of the LIC. After several nationalizations occurred, the number of insurance firms reduced in India. All the firms came under the purview of several insurance firms offering services.
The Insurance Regulatory and Development Act 1999 (IRDAI Act) was brought out with the view to regulate the insurance businesses in India. Such regulation was brought out for the development of the Insurance Sector in India. This regulation governs the registration of insurance business in India, granting of IRDAI Licence for starting an insurance business and protection of the interests of the policyholders. Apart from this, the nodal agency ensures that firms are compliant with the regulations which are brought out from time to time.
Insurance products can be sold to policyholders, either online or offline. IRDA Licence provides a certificate for Insurance companies to operate.
Insurance Regulatory and Development Authority of India (IRDAI) has been set up as a nodal agency to regulate the insurance sector in India. Apart from this, the agency also monitors the regulation of insurance businesses in India. This regulator ensures to maintain the balance between insurance firms and policyholders. Securing an insurance licence for your business is crucial as it involves dealing with financial linked products. Insurance contracts are contracts that provide indemnity to the policyholder on the happening of a particular event. Therefore these areas require regulation constantly. Hence it is essential to obtain an IRDA licence before commencing an insurance business.
An IRDA Licence would be required for the following reasons:
Therefore for the above reasons, an IRDA Licence is required before starting an insurance business in India.
The primary regulatory authority and the law behind securing insurance (IRDA Licence) are:
The applicant has to ensure that the promoter or the company has the following requirements:
All the below businesses require an IRDA licence. IRDA licence is provided for the following businesses:
The following documents are required for an IRDA licence:
IRDA Licence would be valid for one year. The applicant has to make a fresh application for renewing the insurance licence in India.
An applicant who has the insurance licence will make an application under Form IRDA/ R5. This application must be made before 31st December of each year. When an application for renewal is made, the following must be provided as evidence of renewal:
If renewal is not made by the insurance company before 31st December every year, then the application would be accepted by the authority. However, a penalty of 10 percent of the fee payable will be levied on the applicant for delayed payment of fees.
The fee will be paid into the account, which is maintained by the Insurance Regulatory and Development Authority of India with the Reserve Bank of India.
The IRDAI also has the authority to issue a duplicate certificate to the insurance business. The applicant has to make an application under IRDA/R4 and make a payment of Rs 5000/-.