Insurance Regulation and Supervision
Domain 9 tests the legal framework: who regulates insurance, what an agent may do, and how policyholders are protected.
Regulator and statutes
The Insurance Regulatory and Development Authority of India (IRDAI) was created by the IRDA Act, 1999, and works under the Insurance Act, 1938. It licenses insurers, intermediaries and agents, approves products, sets solvency and conduct rules, and supervises the market. Micro insurance products are regulated separately to keep them simple and affordable.
Agent obligations
An agent must hold a valid licence, be appointed by an insurer, follow the code of conduct, disclose commission when required, maintain records and avoid rebating. Commission is paid by the insurer, not by the customer.
Consumer protection
Policyholders have grievance redress through the insurer, then the Insurance Ombudsman for disputes within the prescribed limit, and then consumer courts. IRDAI can penalise insurers and intermediaries for mis-selling or delays.
Worked example
A person sells policies for several insurers without a licence. This is an offence under the Insurance Act; the policies and commissions are at risk, and the insurer that knowingly uses an unlicensed person is also exposed. Licensing and appointment are not paperwork - they are the legal basis for soliciting business.
Traps
Treating IRDAI approval as a guarantee of returns; assuming a licence allows selling for any insurer without appointment; negotiating commission with the customer.