RAS question
Which of the following powers were newly granted to IRDAI under the Sabka Bima Sabki Raksha Act 2025?
Correct answer: (C) Disgorgement powers to recover ill-gotten gains from regulatory violators.
Under the Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Act, 2025, IRDAI gained disgorgement powers to direct recovery of wrongful gains or losses averted through regulatory contraventions.
Explanation
The Act amends section 34 of the Insurance Act, 1938 to widen IRDAI's direction-making power over insurers and insurance intermediaries. When the Authority considers action necessary in the public interest, to protect policyholders, or to secure proper management, it may issue directions, including directions of disgorgement. The Act clarifies that this covers any person who made profit or averted loss through a transaction or activity that contravened the Insurance Act, the IRDAI Act, 1999, or rules and regulations under them. Such a person can be directed to disgorge an amount equivalent to the wrongful gain made or loss averted. That is why option C captures the new regulatory power.
Why the other options are wrong
- (A) The cited amendment gives IRDAI direction-making and disgorgement powers; it does not create a power to nationalise private insurance companies.
- (B) The Act's relevant amendment concerns recovery of wrongful gains or losses averted through contraventions, not benchmark-setting for insurance premiums.
- (D) The cited provision applies to insurers and insurance intermediaries under IRDAI's regulatory directions; it does not grant a power to directly license foreign insurance agents.
Concept
This tests financial-sector regulation, especially how statutory regulators use enforcement powers to protect policyholders and deter rule-breaking. It recurs in RAS because insurance reform links economic governance with consumer protection and regulatory accountability.