Insurance Brokers May Herald End Of Discount

The entry of insurance brokers will see the removal of the five per cent special direct discount on general insurance premium currently offered to corporates. This special discount offered by insurers has hampered the growth and business of agents in the general insurance business.

Speaking on the sidelines of the insurance seminar today, Reliance General Insurance Company chief executive officer Vijay Pawar said the general insurance executive council in its meeting in March had taken the decision for a period of one year till March 2002. "The council will rethink on the decision taken. However, if the broker regulations come through before then, we will relook into the matter," he said.

 

The council's decision was accepted by the regulator. The meeting of the eight CEOs of the general insurance companies was chaired by the Insurance Regulatory and Development Authority (Irda) member, H Ansari for the continuation of the five per cent direct discount. This directive was first issued by the General Insurance Corporation back in 1977 in lieu of agency commissions.

The growth of the insurance intermediary has already been hit as agency commissions have been sealed at five per cent for tariff based businesses. Tariff-businesses -- motor, fire, and engineering -- constitute as much as 70 per cent of the total general insurance market in the country.