Insurance Intermediaries and Regulation (IRDAI)
What this domain tests
This final domain checks the regulatory architecture: who may sell insurance, what licence each intermediary needs, how commissions are governed, and how a policyholder can escalate a grievance.
Core rules
- IRDAI was set up under the Insurance Regulatory and Development Authority Act, 1999, with its headquarters at Hyderabad. It regulates, licenses and supervises insurers and intermediaries; it does not itself sell insurance.
- Intermediaries include individual agents, corporate agents, insurance brokers (direct and reinsurance), web aggregators, insurance marketing firms, third-party administrators and surveyors or loss assessors.
- Agent versus broker: an agent represents the insurer, while a broker represents the client.
- Licensing and conduct: intermediaries must hold a valid IRDAI licence, meet qualification and training requirements, and follow the code of conduct, including disclosure of commissions and no misrepresentation.
- Commission: the IRDAI (Payment of Commission) Regulations, 2017, set caps such as up to 35% of first-year premium in life insurance and 15% in general insurance. The 2023 Regulations shifted to board-approved commission within the overall expense-of-management limits.
- Grievance redressal: first approach the insurer's grievance redressal officer, then the Insurance Ombudsman under the Insurance Ombudsman Rules, 2017, or file on the Bima Bharosa portal. An ombudsman award can be up to ₹30 lakh.
- Policyholder protection: free-look period, written reasons for claim rejection, and the eight-year moratorium on repudiation.
Worked example
An agent sells a policy without disclosing the proposer's pre-existing disease. If a claim arises within the moratorium period, the insurer may repudiate it for non-disclosure. The agent separately faces action for misrepresentation under the code of conduct, and IRDAI may suspend or cancel the agency licence.
Traps that cost marks
- Saying IRDAI sells or guarantees insurance policies.
- Reversing the agent and broker roles.
- Quoting the old fixed commission percentages as if they still bind after the 2023 Regulations.
- Sending a first complaint straight to the Ombudsman without approaching the insurer.