Context
Recently, IRDAI has mandated insurance companies to fast-track the transition to Indian Accounting Standards (Ind AS). This systemic shift, specifically aligned with the global IFRS 17 framework, aims to replace traditional “premium-based” accounting with a “fair value” model. The move is designed to ensure global comparability of Indian insurers’ financial health and enhance transparency for foreign investors ahead of the 2026-27 fiscal year.
1. Statutory Framework and Origin
The Insurance Regulatory and Development Authority of India (IRDAI) is the apex body supervising the insurance sector in India.
- Establishment: It was constituted following the recommendations of the Malhotra Committee Report (1994).
- Legal Status: It is an autonomous and statutory body formed under the IRDAI Act, 1999.
- Headquarters: Initially located in New Delhi, the headquarters shifted to Hyderabad in 2001.
- Nodal Ministry: It operates under the administrative purview of the Ministry of Finance.
2. Composition of the Authority
As per Section 4 of the IRDAI Act, 1999, the body consists of a ten-member team appointed by the Government of India:
- One Chairperson.
- Five Whole-time Members.
- Four Part-time Members.
3. Key Powers and Functions
The IRDAI acts as a guardian for policyholders while ensuring the orderly growth of the industry.
- Licensing: It issues, renews, modifies, withdraws, suspends, or cancels registrations for insurance and reinsurance companies.
- Protection of Interests: It specifies the code of conduct for surveyors, loss assessors, and intermediaries to protect policyholder interests.
- Financial Oversight: It regulates the investment of funds by insurance companies and maintains a percentage of the solvency margin (the capital an insurer holds relative to the risks it takes).
- Adjudication: It adjudicates disputes between insurers and intermediaries or insurance intermediaries.
4. Transformational Initiatives (The “Trinity” of Insurance)
To achieve the goal of “Insurance for All by 2047,” IRDAI has introduced three pillars:
- Bima Sugam: An online platform serving as a protocol for all insurance needs—buying policies, servicing, and claim settlement—modeled after the UPI or ONDC.
- Bima Vahak: A women-centric field force aimed at increasing insurance penetration in every Gram Panchayat.
- Bima Vistaar: An affordable, bundled insurance product covering life, health, property, and accidents specifically designed for the rural population.
5. Recent Regulatory Updates (2025-2026)
- Removal of Age Bar: IRDAI recently abolished the age limit (previously 65 years) for purchasing health insurance, making coverage accessible to senior citizens regardless of age.
- Ind AS Implementation: The regulator has proposed the implementation of Indian Accounting Standards (Ind AS) for all insurers effective from April 1, 2026, to align with global financial reporting standards.
- Pre-existing Disease (PED) Waiting Period: The waiting period for covering pre-existing diseases in health insurance has been reduced from 48 months to 36 months.
Q. With reference to the Insurance Regulatory and Development Authority of India (IRDAI), consider the following statements:
Statement-I: The IRDAI is a constitutional body established to regulate and promote the insurance and re-insurance industries in India.
Statement-II: The IRDAI has recently mandated that health insurance providers cannot deny coverage to individuals based on their age.
Which one of the following is correct in respect of the above statements?
(a) Both Statement-I and Statement-II are correct and Statement-II is the correct explanation for Statement-I.
(b) Both Statement-I and Statement-II are correct and Statement-II is not the correct explanation for Statement-I.
(c) Statement-I is incorrect but Statement-II is correct.
(d) Statement-I correct and Statement-II are incorrect.
Correct Answer: (c)
Solution:
• STATEMENT I IS INCORRECT: IRDAI is a statutory body (created by an Act of Parliament, the IRDAI Act 1999), not a constitutional body. Constitutional bodies are those mentioned in the Constitution of India (e.g., Election Commission, UPSC).
• STATEMENT II IS CORRECT: In a landmark move to enhance inclusivity, IRDAI recently removed the 65-year age ceiling for buying health insurance policies, ensuring that senior citizens can enter the insurance net at any age.
