The Role of IRDA in Safeguarding Policy Holder’s Interest

Published by Sharekhan Education | March 27, 2021

The Role of IRDA in Safeguarding Policy Holder’s Interest

“Life is a one-time offer – you don’t get a chance to change your mind when you are gone, you need to face reality while you can do something about it. Secure your family’s future now before it’s too late”, read a billboard on high street.

Reading this billboard Raj realized that it made sense. It suddenly dawned on him that life was uncertain and could slip through his fingers anytime. Being the prime bread winner a surge of questions clouded his mind: how will my family survive after me? Will their income stop if I am No more? Who will take on their financial responsibilities then? He decided to secure his families future and take a life insurance policy as soon as possible.

Raj made a wise decision. Insurance is an important risk management tool. It can help secure the financial losses that may disrupt your life on account of various events that may cause damage to your health, life or and even assets.

Generally speaking Insurance- life or nonlife is a contract between you and the insurance company whereby you, the insured promises to pay premiums and the insurer (insurance company) promises to pay claims on happening of the insured event. It is a safety net which provides protection against financial losses occurring due to death, accidental injuries or damage to assets as the insured gets compensated to the extent of the cover opted for. It is thus a very vital component of your financial or wealth plan; which is considered incomplete without adequate insurance.

Such an important decision does bring many questions to mind: will the insurance company honour its commitment when claim arises, especially when you are not around? Whom should you approach if your claim is rejected? What if the insurance company winds up or becomes bankrupt?

These concerns are understandable and if any of these turn true, it would  defeat the very purpose of insurance. However you need not worry. In order to safeguard the policy holders’ interest, government of India has set up a regulatory body the IRDAI – Insurance Regulatory and Development Authority of India.

Role of IRDA:

IRDAI is the apex authority regulating the overall functioning of all the Life and Non-Life Insurance companies in India. Its main duty is to regulate, promote and ensure orderly growth of insurance and re-insurance business in India. It ensures that insurance benefits reaches rural areas and to the vulnerable sections of the society. IRDA registers and regulates insurance companies and sets norms for intermediaries. It is important to note that an insurance company cannot bring out any new policy without the approval of IRDA.

Besides this, IRDA has set up tariff advisory committee which controls and regulates the rates, advantages, terms and conditions offered by insurers in the general insurance business. IRDA has also set up Insurance ombudsman in various cities where the policy holders can lodged their unsolved complaints pertaining to claims, issue of policy, premiums etc.

IRDA ensures maintenance of solvency margin by insurance companies; this minimizes the risk of bankruptcy to a great extent.

Summary:

To summarize we can say that IRDAI’s mission is to safeguard policy holder’ s interest. So you need not worry ;and in case of any disputes or complaints. Rest assured as IRDA has adequate redressal mechanisms in place.

Learn stocks trading course, derivatives and trading strategies from sharekhan Education’s online Mastering futures and options trading course.