Revamp Of Intermediaries Round The Corner

The Insurance Regulatory Authority (IRA) has already formulated a major portion of the guidelines governing the insurance industry. These will be announced once the IRA bill is passed during the monsoon session of Parliament, N Rangachary said while speaking at the insurance seminar organised by Insurance Institute of India (III).

Providing glimpses of the regulations, he said that efforts are aimed towards explicit guidelines for each of the intermediaries in the insurance industry, thus making the agents, brokers and surveyors more professional.

The first step would be for each of these intermediaries to form their own all-India level associations and enforce self regulation.

 

The thrust would be on making the industry self regulatory with the IRA overseeing the process. He endorsed the view expressed by David E Bland, director general, Chartered Insurance Institute, that agents will, in due course of time, become financial advisers. "The job of an intermediary will change from that of being a part-time occupation to a specialised one," he said.

Hence it was necessary that a reasonably strict criteria be prescribed before licences can be given to agents, brokers and surveyors. He said that since September 1996, the IRA has given licences to around 300 to 400 surveyors every month, but there is no follow up on their operations. K C Mittal, chairman, General Insurance Corporation (GIC), said that they have submitted papers to the regulator in this regard. Rangachary hinted at the possibility of grading the performance of agents and the business that they will be allowed to carry out will be linked to their qualifications.

From now on, the agents, brokers and surveyors will have to pass certain examinations. The minimum qualifications will be worked out in consultation with the III. Two members of the IRA have been co-opted into the education committee of the institute.

Given that there will be a shake out in the industry especially with respect to the intermediaries, the IRA chairman said that initially there will some concessions which would be withdrawn in due course. A maximum ceiling on the commissions that can be paid is also likely to be imposed and will form part of the management expenses of the insurance company.

In his presentation, Rangachary said the Loss Prevention Association (LPA) should be converted into a All India Institute of Risk Management. All the existing institutes which offer course in risk management could be merged with this entity.

He said that he has spoken to Mittal in this regard. Mittal, however, had his reservations about the LPA being transformed into a risk management institute.

He said that as per GIC's plans a separate wing in the LPA will be created which will look at the issue of risk management.