Insurance brokers urge Irdai to allow them to appoint 'Bima Vahaks'

Insurance brokers have requested the Insurance Regulatory and Development Authority of India (Irdai) to allow them to appoint ‘Bima Vahaks’ and not limit the appointments to insurance companies, as this will aid in insurance penetration.

The proposal was put forth during the ‘Bima Vitarak Manthan’ held earlier this month. The meeting was attended by various insurance intermediaries, including insurance brokers, corporate agents and other insurance marketing firms.

The event was organised to share insights as well as explore innovative strategies and collaboration in the insurance sector.

“During the Bima Vitarak Manthan, one of the proposals put forward by the Insurance Brokers Association of India (IBAI) was to allow insurance brokers and corporate agents to appoint Bima Vahaks instead of limiting their appointment by insurance companies only,” R Balasundaram, secretary general, IBAI told Business Standard.

“It was suggested that corporate agents, insurance brokers and other distribution channels appointing women as Bima Vahaks at the Gram Panchayat level should lead to a faster creation, training and service support. This is because brokers or corporate agents have the experience, expertise and infrastructure to support them,” Balasundaram said.

Bima Vahak, a part of Irdai’s Bima Trinity, is a women-centric, dedicated distribution channel to sell insurance products. Bima Vahak is a legal person registered in accordance with the respective laws and engaged by an insurer.

Insurance companies have the authority to appoint individuals or engage with corporate Bima Vahaks to progressively achieve coverage of every gram panchayat.

The Bima Vahaks, both corporate and individual, will be authorised to undertake activities like collection of proposal information, know-your-customer (KYC) documents and co-ordinate claims-related services.

According to brokers, insurance companies will have to invest in ‘Bima Vahaks’, which will be a fixed cost for insurers. But it will be a variable cost for the distribution channels. The expertise offered by the distribution channel will also aid in insurance penetration in the country.

While discussing other methods to boost penetration, insurance brokers have also asked for additional distribution channels.

Vedanarayanan Seshadri, managing director (MD), Mahindra Insurance Brokers, said, “Insurance brokers have also said that auto dealers, under the motor insurance service provider (MISP) arrangement, be allowed to distribute other products. This is to leverage their extensive reach across the country to fast track penetration of insurance products.”

In 2017, Irdai framed Guidelines on Motor Insurance Service Provider, 2017 (“MISP Guidelines”), following the report of a committee set up to review payouts to automobile dealers. The guidelines regulated the distribution of motor insurance products by automobile dealers.

Now, insurance brokers have suggested the sale of other basic insurance products through these auto dealers.

Furthermore, IBAI has also given a few recommendations, which will enhance the role of insurance brokers and improve the overall customer experience. These include reducing educational qualifications of insurance agents from Class 10 pass to Class 8 pass.

They have also suggested participation of insurance brokers in State Level Insurance Committees (SLIC) and steering state-level insurance programmes for last-mile penetration. This will extend coverage to villages through Gram Panchayats and District-level Insurance Committees.