IRDA licence Cancellation Process Online

Whenever a business decides to get into offering insurance services, it is obliged to get approval from IRDA (Insurance Regulatory and Development Authority of India). The first and foremost objective of this body is to look after the management of insurance services being provided by insurance companies in India.

There are essentially 3 linear stages that an applicant has to undergo while seeking the IRDA Certificate registration for an Insurance Company in India.

What is IRDA?

IRDA stands for Insurance Regulatory and Development Authority which is an autonomous body that looks after the insurance sector in the country. Being one of the vast domains in India, the insurance sector not only offers enormous growth opportunities to investors but also plays a pivotal role in the growth of the country’s economy. IRDA is like the top body of the insurance industry that delineates the guidelines and rules for various insurance companies operating in the domain.

The authority and activities of IRDA come under the purview of the IRDA Act, 1999, and the Insurance Act, 1938. The Insurance Act of 1938 is the foremost act managing the Insurance industry in India. It discharges the controls to IRDAI to design rules and regulations that form the basis for the regulatory outline for the management of the companies operating in the Insurance sector. Section 14 of the IRDA Act, 1999 refers to the Duties, Influences, and Functions of the Insurance Regulatory Authority. 

Major Responsibilities of IRDA

The main roles and responsibilities of the Insurance Regulatory and Development Authority (IRDA) are:

• To provide, renew, change, withdraw, suspend, or cancel registrations is one of the important functions of the Insurance Regulatory and Development Authority or IRDA.
• To safeguard policyholders' interests, which provides them a level of security and confidence regarding the policy they have invested in.
• To determine the qualifications, code of conduct, and exercise for intermediaries and insurance agents, to guarantee that only skilled and talented people get engaged in the process.
• To instill efficiency in carrying out the insurance business.
• To promote and govern professional businesses that are related to the insurance and reinsurance companies.
• To check and examine insurers, mediators, and other concerned organizations.
•  To govern company investment of funds and margin of solvency.
• To arbitrate issues between insurers and intermediaries or insurance companies.
• To delineate the percentage of premium income to finance programs for promoting and managing professional insurance businesses.
• To specify the percentage of life and general insurance business related to the rural and social sector.
• To specify the type and pattern in which the books of accounts are to be kept and statements of accounts shall be presented by insurers and other insurance mediators.
• To control the rates, benefits, guidelines, which may be given by insurers and not sheltered by the Tariff Advisory Committee under section 64U of the insurance Act, 1938.
•  To head the Tariff Advisory Committee.
• To promote the universal growth of the insurance industry to benefit the general public who invest in the policies.

Read more about: Functions of IRDA in Insurance Sector

Cancellation or Suspension of IRDA License

As per the fresh guidelines by IRDAI about the IRDA registration and cancellation insurance firms in India, the authority is entitled to append or cancel the IRDAI/R3 certificate (Certificate of Registration) given to an insurance company. The cancellation or suspension of the license can be for a category of Insurance business for a specific time frame as mentioned under the notice. The suspension or cancellation of the registration certificate can be due to several reasons:

• The insurance company is unable to adhere to the necessities of the Insurance Act 1938 and Sections 64V and 64VA of the act.
• The insurance company turns insolvent or is presently facing liquidity.
• The insurance company is given to any other individual or combined with another insurance company without the prior endorsement.
• There is an avoidance of adhering to the provision or any requirement of the act, rules, regulation, Direction, or order.
• The nature of the company’s business is harmful to the interests of the policyholders.
• The insurance company fails to provide the required information to the IRDA.
• The insurance company does not submit any returns with the authority
•  The insurance company does not provide support in the inquiry performed by the IRDA.
• The insurer indulges in unethical business practices and devious practices.
•  The insurer does invest in the infrastructure or social domain.
• The authority has a valid reason to assert that any claim coming from the insurer stays unpaid for 3 months after the eventual order of the court of law.
• The insurance company performs other business activities than for which the registration certificate was awarded.
• The insurance company fails to comply with the instructions or orders passed by the authority.
• The insurance company fails to comply with the provisions of the Companies Act 2013, General Insurance Business (Nationalisation) Act, 1872, FEMA 1999, or PMLA, 2002.
• The insurance company is unable to pay the annual charges.
• The insurance company or promoter does not comply with the “fit & proper” criteria.
•  The insurance company is condemned for an offense.

Procedure for IRDA License Cancellation

IRDA shall release an eventual notice for cancellation of the insurance company’s license and the insurance company shall be prevented from working as an insurance broker from the date of the order

An announcement of cancellation of license shall be done through media houses- one English and one regional language and the same shall be posted on company’s website.

The authority has the authority to negate the monetary deposit of the insurance company in such a case.

An insurance company whose license has been cancelled is entitled to continue its service contracts already decided through him for a time frame of six months from the date of cancellation of registration within which necessary preparations shall be done to for having the contracts managed by another insurance company.

The insurance company that is confirmed by the authority to service the contracts from the previous insurance broker shall request the insurer to serve the contracts for the term.

Right after seeking the approval for the handover of responsibilities of policy service from the insurer can the registered insurance broker take up remuneration on existing contracts in trend with potential effect from the date of the contract?

The insurer broker with a canceled IRDA license is subjected to pay remuneration to contracts in vogue with future effect from the date of service allotment of the contacts to the insurance company to whom the insurer has awarded the authority.

How Registrationwala can help?

Whether  you want to know more about IRDA Registration, cancellation or want any kind of legal and professional support regarding this, Registrationwala has a team of professionals who are vying to provide full-fledge support for IRDA license cancelled or suspension.

Author: Dushyant Sharma

Hey there, I'm Dushyant Sharma. With the extensive knowledge I've gained in past 8 years, I have been creating content on various subjects such as banking, insurance, finance and all the important registration and licensing processes for various companies. I'm here to help everyone with my expertise in these areas through my articles.