Irdai approves new broking consultancy norms

The Insurance Regulatory and Development Authority of India (Irdai) will soon allow insurance brokers to offer consultancy for claims not exceeding Rs 10 crore without the need for regulatory approvals. For claims exceeding Rs 10 crore, the brokers will have to seek prior approval from the regulator.

The last Irdai board meeting held in August cleared changes to the Brokers Regulations, said Sanjay Kedia, president, Insurance Brokers Association of India, adding that a formal notification is expected to be out soon.

For the past one decade, the association’s stand has been that policyholders should have a choice to decide their service provider with regard to claims.

Kedia said the broker represented the policyholder, and not allowing a policyholder to access the services of a qualified licensed broker in a completely free manner was denying him/her the right to exercise claim settlement.

“The association's demand was agreed to by Irdai. We hope that in times to come, the regulator will remove all restrictions, including prior approval of Irdai for claims above Rs 10 crore,” he said.

The Insurance Regulatory and Development Authority of India (Insurance Brokers) Regulations, 2013, had provisions that allowed insurance brokers to offer claim consultancy to policyholders for claims up to Rs 1 crore, provided such claims did not emanate from a policy which had been placed by any other broker.

Insurance broking registered a compounded annual growth rate (CAGR) of 27.7 per cent between FY10 and FY15. It is expected that insurance broking will contribute close to 40 per cent of gross direct premium in the non-life insurance market by 2025. The non-life insurance market in 2025 is expected to be at Rs 4,00,000 crore, and the brokers’ market share is likely to be around Rs 1,60,000 crore, according to EY Vision Report 2025.