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Risk Management in Banking and Insurance · Insurance Intermediaries

IRDAI Duties, Powers and Functions under Section 14

Updated 11 October 2026 · Fact-checked

Section 14 of the IRDA Act, 1999 gives the Authority a duty to regulate, promote and ensure orderly growth of insurance and re-insurance business. Sub-section (2) lists its powers, such as registration, protecting policy-holders, setting intermediary standards, inspection, investment and solvency rules. To answer, name the duty, then match each power to the facts.

Understand IRDAI Duties, Powers and Functions under Section 14

Section 14 is the core provision on what the Insurance Regulatory and Development Authority (IRDAI) does. Sub-section (1) states the duty: subject to the Act and other laws, the Authority must regulate, promote and ensure orderly growth of the insurance business and re-insurance business. Three verbs matter: regulate, promote, ensure orderly growth.

Sub-section (2) then lists powers and functions. It says these are "without prejudice to the generality" of sub-section (1). This means the list is illustrative. The general duty is wider than the list.

Group the clauses to learn them. Registration and market entry: certificate of registration, with power to renew, modify, withdraw, suspend or cancel (clause a). Policy-holder protection: assignment, nomination, insurable interest, claim settlement, surrender value and contract terms (clause b). Intermediaries and agents: qualifications, code of conduct and practical training (clause c); code of conduct for surveyors and loss assessors (clause d); adjudication of disputes between insurers and intermediaries (clause m).

The next group covers supervision and finance of insurers: calling for information, inspection, enquiries, investigations and audit (h); rates, advantages, terms and conditions in general insurance (i); form of books of account and statements (j); investment of funds (k); margin of solvency (l). The remaining clauses cover other functions: efficiency in business (e), professional organisations (f), fees (g), penalty under section 102 of the Insurance Act, 1938 (n), premium percentage for professional bodies (o), rural and social sector percentage (p) and other prescribed powers (q).

Note how the powers work with the Insurance Act, 1938. Section 114A of that Act lets the Authority make regulations by Gazette notification, consistent with the Act and rules. Those regulations cover, for example, the manner and fee for licensing intermediaries (section 42D), their qualifications, training, examination and code of conduct, and the form of record-keeping under section 14 of the 1938 Act. Regulations are laid before Parliament for 30 days.

Key rules to remember

General duty (s.14(1))
Regulate + promote + ensure orderly growth of insurance business and re-insurance business
Subject to the Act and any other law in force.
Registration power (s.14(2)(a))
Issue certificate of registration; renew, modify, withdraw, suspend or cancel it
Applies to applicants for registration. Know all five actions after issue.
Policy-holder protection (s.14(2)(b))
Assignment, nomination, insurable interest, claim settlement, surrender value, other contract terms
Six named matters plus terms and conditions of contracts.
Intermediary standards (s.14(2)(c), (d))
Qualifications + code of conduct + practical training for intermediaries, insurance intermediaries and agents; code of conduct for surveyors and loss assessors
Surveyors and loss assessors get a code of conduct in clause (d).
Supervision (s.14(2)(h))
Call for information, inspect, enquire, investigate, audit
Covers insurers, intermediaries, insurance intermediaries and other connected organisations.
Financial control clauses
(j) books and accounts; (k) investment; (l) solvency margin
Clauses (i) rates and terms relate to general insurance business.
Regulation-making (s.114A, Insurance Act 1938)
Regulations by Gazette notification, consistent with Act and rules, laid before Parliament for 30 days
Source of detailed licensing and conduct rules.

How to solve IRDAI Duties, Powers and Functions under Section 14 questions

Use this method for any question on the Authority's duties, powers or its control over intermediaries.

  1. 1Read the facts and identify what the Authority is doing: registering, protecting policy-holders, setting standards, inspecting, or controlling finances.
  2. 2State the general duty in section 14(1): regulate, promote and ensure orderly growth of insurance and re-insurance business.
  3. 3Match the action to the correct clause of section 14(2) and name the clause letter if you are sure.
  4. 4For intermediary questions, cover qualification, code of conduct and practical training, plus licensing under the regulations made under section 114A.
  5. 5Apply the power to the case. For example, say whether suspension, cancellation, inspection or dispute adjudication fits.
  6. 6Add limits: the powers are subject to the Act and other laws, and regulations must be consistent with the Act.
  7. 7Conclude with a clear answer linked to the facts.

Quickest way: Five-bucket sort

When to use it: For MCQs and short notes where you must pick the right power quickly.

  1. Sort the facts into one bucket: entry (registration), protection (policy-holders), people (intermediaries, agents, surveyors), supervision (inspection, audit) or money (investment, solvency, accounts).
  2. Recall the clause that sits in that bucket.
  3. Eliminate options that give the Authority a power not listed or that overstate it.
  4. Check the exact words, such as general insurance only in rate control.

Common mistakes in IRDAI Duties, Powers and Functions under Section 14

  • Treating the clause list in section 14(2) as exhaustive.

    Students memorise the list and forget the opening words.

    Fix: Remember it is "without prejudice to the generality" of sub-section (1). The general duty is wider.

  • Saying the Authority controls rates for all insurance business.

    Clause (i) is remembered loosely.

    Fix: Clause (i) speaks of rates, advantages, terms and conditions in respect of general insurance business.

  • Mixing up section 14 of the IRDA Act with section 14 of the Insurance Act, 1938.

    Both sections have the same number.

    Fix: IRDA Act section 14 is the Authority's duties and powers. Insurance Act section 14 is the insurer's record of policies and claims.

  • Forgetting that the Authority can modify, withdraw, suspend or cancel registration, not only issue it.

    Students think of registration as a one-time grant.

    Fix: Quote clause (a) in full: issue, renew, modify, withdraw, suspend or cancel.

  • Leaving out re-insurance business from the duty.

    Students shorten the duty to insurance business.

    Fix: Write "insurance business and re-insurance business".

  • Attributing detailed licensing procedure to section 14 itself.

    The licensing topic is linked to the Authority.

    Fix: Section 14 gives the power. Detailed fee, manner and conduct rules come through regulations under section 114A of the Insurance Act, 1938.

Worked examples

Example 1

An insurance intermediary repeatedly breaches the prescribed code of conduct and mis-sells policies. State the powers available to IRDAI under section 14 of the IRDA Act, 1999.

Show the solution
  1. The general duty in section 14(1) is to regulate and ensure orderly growth of insurance business, which includes fair conduct.
  2. Clause (c) lets the Authority specify qualifications, code of conduct and practical training for intermediaries, insurance intermediaries and agents. The breached code comes from this power.
  3. Clause (b) allows protection of policy-holders in matters such as contract terms and claim settlement. Mis-selling harms policy-holders.
  4. Clause (h) allows it to call for information, inspect, enquire and investigate the intermediary.
  5. Clause (a) allows it to suspend or cancel the registration, where the intermediary was registered.
  6. Clause (n) allows imposing the penalty specified in section 102 of the Insurance Act, 1938 for violations.

Answer: IRDAI can investigate under clause (h), enforce the code set under clause (c), protect policy-holders under clause (b), suspend or cancel registration under clause (a) and impose penalty under clause (n), all within its duty under section 14(1).

Example 2

Which of the following is NOT a power or function expressly listed in section 14(2) of the IRDA Act, 1999? (A) Regulating investment of funds by insurance companies (B) Regulating maintenance of margin of solvency (C) Specifying the code of conduct for surveyors and loss assessors (D) Fixing the retail price of every motor vehicle sold in India

Show the solution
  1. Option A matches clause (k).
  2. Option B matches clause (l).
  3. Option C matches clause (d).
  4. Option D has no connection with insurance regulation and appears nowhere in section 14(2).

Answer: (D). The other three are expressly listed in section 14(2).

Exam tips

  • Learn the clauses in five buckets (entry, protection, people, supervision, money) so you can recall them under pressure.
  • In written answers, open with the section 14(1) duty and then apply the clause. This shows application, not recall.
  • Write exact wording for registration: issue, renew, modify, withdraw, suspend or cancel.
  • In case scenarios, link the Authority's power to the regulations under section 114A, since licensing detail sits there.
  • Do not quote clause letters you are unsure of. Describe the power in words instead.

Practice questions from Insurance Intermediaries

IRDAI Duties, Powers and Functions under Section 14 in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

IRDAI Duties, Powers and Functions under Section 14: frequently asked questions

What is the main duty of IRDAI under section 14 of the IRDA Act, 1999?

Its duty is to regulate, promote and ensure orderly growth of the insurance business and re-insurance business. This is subject to the Act and any other law in force. The listed powers in sub-section (2) support this duty.

How does IRDAI deal with insurance intermediaries?

Section 14(2)(c) lets it specify qualifications, code of conduct and practical training for intermediaries, insurance intermediaries and agents. Clause (m) covers adjudication of disputes between insurers and intermediaries. Detailed licensing rules come through regulations made under section 114A of the Insurance Act, 1938.

Can IRDAI cancel a registration?

Yes. Clause (a) lets the Authority issue a certificate of registration and renew, modify, withdraw, suspend or cancel it. Clause (n) separately allows it to impose penalties for violations.

How is section 14 of the IRDA Act different from section 14 of the Insurance Act, 1938?

The IRDA Act section sets out the Authority's duties, powers and functions. The Insurance Act section requires every insurer to maintain a record of policies and a record of claims. They are unrelated despite the same number.