Irda clarifies motor insurance guidelines
, ET Bureau|
Jan 11, 2018, 11.32 PM IST
MUMBAI: The insurance regulator today further clarified the guidelines on motor insurance asking automobile dealers who have turned into motor insurance service provider and insurance intermediary not to enter into an agreement with the original equipment manufacturers which has an influence on the sale of motor insurance policies. This has opened up auto dealership to the entire insurance industry.
The insurance regulator wants the tie-up to be between insurance companies, intermediaries and automobile dealers who have turned into MISP.
"It is reported that the Original Equipment Manufacturers -OEM's are exercising undue influence both on the insurance intermediary and the automobiles dealer who have become MISP without having corresponding accountability for their actions," said regulator in a circular issued on Thursday. "In order to ensure that MISP guidelines work in the interest of the customers, it is advised that no MISP or the insurance intermediary can enter into an agreement with the OEM which has an influence or bearing on the sale of motor insurance policies."
Insurance companies had approached the regulator stating that they are not included in the panel of Insurance brokers, MISP's as it is not compulsory for Insurance broker, MISP to empanel all insurance companies for selling motor insurance policies.
The regulator has capped payments by insurers to agents and dealers at 19.5% for cars and 22.5% for two wheelers and brought them under its purview as motor insurance service providers from November 2017.
Irda said that it is of the view that with the remuneration levels for the insurance intermediaries and MISP being stipulated, the creation of a panel of insurers is restrictive, which can lead to undesirable market practices.
"To remove misgivings in the minds of the stakeholders it is clarified that neither the insurance broker nor the MISP can create such a panel of insurer for selling motor insurance policies. However, the insurance companies should enter into service level agreements with insurance brokers/ MISPs based on transparent and objective criteria," the regulator said.
The insurance regulator wants the tie-up to be between insurance companies, intermediaries and automobile dealers who have turned into MISP.
"It is reported that the Original Equipment Manufacturers -OEM's are exercising undue influence both on the insurance intermediary and the automobiles dealer who have become MISP without having corresponding accountability for their actions," said regulator in a circular issued on Thursday. "In order to ensure that MISP guidelines work in the interest of the customers, it is advised that no MISP or the insurance intermediary can enter into an agreement with the OEM which has an influence or bearing on the sale of motor insurance policies."
Insurance companies had approached the regulator stating that they are not included in the panel of Insurance brokers, MISP's as it is not compulsory for Insurance broker, MISP to empanel all insurance companies for selling motor insurance policies.
The regulator has capped payments by insurers to agents and dealers at 19.5% for cars and 22.5% for two wheelers and brought them under its purview as motor insurance service providers from November 2017.
Irda said that it is of the view that with the remuneration levels for the insurance intermediaries and MISP being stipulated, the creation of a panel of insurers is restrictive, which can lead to undesirable market practices.
"To remove misgivings in the minds of the stakeholders it is clarified that neither the insurance broker nor the MISP can create such a panel of insurer for selling motor insurance policies. However, the insurance companies should enter into service level agreements with insurance brokers/ MISPs based on transparent and objective criteria," the regulator said.
