IRDAI Delegates Penalty Powers To Speed up Enforcement Action Against Insurers, Agents
IRDAI’s move aims to streamline enforcement proceedings and enable quicker action over regulatory violations.
IRDAI delegates penalty powers to speed up enforcement action against insurers and insurance agents.
New Delhi: IRDAI – The Insurance Regulatory and Development Authority of India (IRDAI) has decentralised key penalty and enforcement powers under the Insurance Act, 1938, in a move aimed at faster regulatory action against insurers and intermediaries, according to a gazette notification published on the regulator’s official website.
Until now, several enforcement decisions required sign-off at the level of the full Authority. Under the new framework, these powers will be exercised by the Chairperson, whole-time members, or panels, cutting down decision-making layers.
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IRDAI: What the delegation covers
Under Section 34 of the Insurance Act, the power to issue directions to insurers or intermediaries for identified violations during enforcement proceedings can now be exercised by the Chairperson or any whole-time member.
Penalty powers under Section 102, covering failure to file documents, non-compliance with directions, solvency margin lapses, and breaches related to insurance treaties, have been delegated to a whole-time member, or panels comprising the Chairperson and a whole-time member, or two whole-time members. The Chairperson will decide case-by-case which authority handles a matter.
Similar delegation applies to penalties under Section 104 (violations of Sections 27 and 27E) and Sections 105C(2) and 105D, which deal with penalties following inquiry reports from adjudicating officers.
The regulator has also delegated penalty powers under Regulation 22(6) of the IRDAI (Registration of Corporate Agents) Regulations, 2015, and under its 2015 guidelines on insurance repositories and electronic policy issuance.
Not everything has been delegated. Directions on any other matter under Section 34 will continue to rest with the Chairperson, in line with a call taken at the Authority’s 135th meeting.
IRDAI: Part of a broader enforcement push
The delegation comes just days after IRDAI imposed a Rs 1 crore penalty on ICICI Lombard General Insurance for regulatory violations flagged during an on-site inspection, underscoring the pace of enforcement activity the regulator is currently managing.
It also follows a broader push to formalise how IRDAI polices the sector. The regulator has separately proposed the IRDAI (Manner and Procedure for Imposing Penalties) Regulations, 2026, under provisions introduced by the Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Act, 2025, intended to bring a uniform, transparent framework to how penalty proceedings are initiated and conducted. IRDAI has since responded to public comments on that draft framework, addressing questions on suo moto proceedings and personal hearing rights.
Taken together, this is seen as part of a dual regulatory push, easing capital and operational norms to draw investment while simultaneously tightening intermediary accountability and enforcement transparency. The delegation of powers effectively operationalises that enforcement side, letting cases move without waiting for full-board deliberation.
With IRDAI having issued several high-value penalties this year, including against major insurers and brokers, the move is expected to reduce bottlenecks and speed up the regulator’s response to identified violations.
