Irda panel moots changes in distribution set-up

The committee also recommended a drastic reduction in the capital required for a corporate agent from Rs 15 lakh to Rs 1 lakh. Irda, which constituted the committee on September 21, 2007, posted the report on its website on Tuesday.

In its 60-page report, the 10-member committee constituted under the chairmanship of NM Govardhan, former chairman of LIC, stated that urban cooperative banks, regional rural banks, microfinance institutions registered with the RBI and non-government organisations registered as trusts should be permitted to distribute micro insurance policies.

The committee also recommended direct marketing and web-based selling of all insurance products. "These should be developed as channels to reach out to the mass market with simple products requiring limited or no advisory," it said.

The report also stated that a customer who buys through the telecalling mode should be provided a printed copy of the caller's questions and the resultant responses. In case of e-mail interactions, encryption should be used to protect the target person's privacy.

The committee has made over two dozen recommendations on retail products with the intention of increasing the penetration of general insurance in the country.

Gary Bennett, the chief executive officer of Max New York Life Insurance Company and a member of the committee, submitted a dissent note, emphasizing that banks should be permitted to sell products of more than one life insurer.

"This would be in the interest of the customer and has also been strongly recommended by the Indian Banks Association," he pointed out.

Another member, chief executive officer of IFFCO-Tokio General Insurance Company Limited, S Narayanan, also submitted a dissenting note.