Debasish Panda, chairman,IRDAI
“We have decided to dispense with renewal of registration for insurance intermediaries and allow their licenses in perpetuity,” said Debasish Panda, newly appointed chairman of IRDAI while addressing a press conference in Mumbai
Existing regulations require Brokers, TPAs and Surveyors,corporate agents have to renew their licenses in every three years
IRDAI also has decided to introduce Bima Mitra on the lines of Bank Mitra to enlarge the scope of distribution. The aim here is to bring ‘insurance to every doorstep’, Panda said
Accepting one of the the long-standing demands of Indian insurance brokers, the insurance regulator IRDAI has reversed its earlier stand and has decided to dispense with the renewal of registration for them along with other intermediaries including surveyors, Third Party Administrators(TPAs) and corporate agents who are majorly banks.
“We have decided to dispense with renewal of registration for all insurance intermediaries and allow their licenses in perpetuity, Necessary amendments in the Insurance Act are getting ready,” said Debasish Panda, newly appointed chairman of IRDAI, while addressing a press conference in Mumbai on Thursday.
There are now 550 registered insurance brokers all over the country who have to renew their licenses in every three years. The broking industry channelise almost 25 per cent of annual non-life premium or over Rs 40,000 crore of re/insurance business for the industry.
“This has been a long standing request of the brokers. We welcome the move by the regulator and thank the new IRDAI chairman for giving the brokers a big relief. This is will certainly improve the confidence of the brokers and investors and provide the necessary impetus to the industry,” said Sumit Bohra, president, Insurance Brokers Association of India(IBAI).
There are three categories of brokers direct and composite and reinsurance and the government regulations allow 100 per cent foreign direct investment (FDI) in the sector.
“IRDAI’s decision to do away with license renewal, allowing authorised intermediaries to operate in perpetuity, is a positive move favouring the broking fraternity. In continuation to the same, the shift from rule based approach to principles based approach will streamline regulatory requirements, and promote ease of doing business. This will encourage brokers to perform in true capacity as an advisor, and adhere to the spirit of intermediary,” said Vinay Sohani,CEO & MD, Gallagher Insurance Brokers, a subsidiary of US based Arthur J. Gallagher & Co.
Existing regulations require TPAs and Surveyors,corporate agents also have to renew their licenses in every three years which going forward will not be necessary.
IRDAI has also decided to introduce Bima Mitra on the lines of Bank Mitra to enlarge the scope of distribution. The aim here is to bring ‘insurance to every doorstep’, Panda said.
He said new distribution channels would be introduced and at the same time, the scope of existing distribution channels would be widened to ensure widespread availability of insurance products.
The IRDAI will also facilitate lowering operating costs and reviewing commission/ remuneration structure of insurance products with aim of reducing costs to policyholder, said IRDAI chief.
The insurance regulator will also help enhance technical competencies of insurance agents and field force of the insurers, he said.
Earlier, the IRDAI had flatly rejected the demands of the brokers to have their licenses in perpetuity.
Whiile addressing the 17th Annual Insurance Insurance Brokers’ Summit organized by IBAI in January 2021, Subhash Khuntia, the then chairman of IRDAI had said ,“ One of the demands of the brokers was to have their licenses in perpetuity. We can’t accept it. The current system, where each broker has to renew his license in every three years, is perfectly fine. Even,in some countries, the insurance brokers need to renew their licenses in every two years.’’
The IRDAI has found out instances of mis-selling by insurance brokers who are dealing with life insurance policies, he had pointed out.
“We have instances where reinsurance brokers are mis-using the reinsurance premiums for their own purposes and not paying it to the reinsurers as per the agreement,’’ he had cautioned.
“On the basis of mi-selling complaints received by the IRDAI , almost 11 per cent are related to life insurance policies and 28 per cent of such mis-selling are being done by the brokers,’’ Khuntia had said.
Khuntia had asked the brokers community to follow `Code of Conduct’’ meant for them and go beyond act of price discovery for customers and provide them information of various risks faced by them.
Khuntia also asked IBAI to assume bigger role of a Self Regulatory Organisation(SRO) for the broking community.
“If IBAI can act as a SRO for the broking industry , we are willing to reduce our regulatory responsibilities towards this segment,’’ he had said.
This can be described as the moment of big change in mind set and attitude of Regulator in accordance with atmosphere of liberalisation . Much awaited and much needed . Big Thank you !
Much appreciated decision which was long overdue.
Great effort to improve the insurance industry by Mr panda,he is doing exceptional for all concerned of insurance sector,i specially pray him for individual insurance surveyors status over all.
The decision to dispense with renewal of license is welcome, but my question is?
why it was considered necessary 20 years back.
What were the logic to collect fee and compulsory 25 hours training, for renewal of license.
What has changed today which no more
holds good today.
Only whimsical and bizarre decision of a single mind
Most welcome change and it signifies a paradigm shift towards development
Brilliant steps by IRDAI
Brilliant steps by IRDAI
This is a great deciion and helpfull to all intermediaries.
Insurance surveyors also being intermediary should get the same benefit of license renewal.
Perpetuity of License renewal for insurance intermediaries is a welcome move.
I really can’t understand why even responsible people are supporting this decision.
General Insurance is a knowledge heavy service and despite current regulations we don’t see much value add by most brokers. On the contrary much ill informed advice is the norm.
I would definitely like to know reasons for their support to this step
I 100% agree here. Of all the institutions brokers should be heavily scrutinised and adhere to strict compliance. They are just an additional cost to policyholder. Their sole aim is to maximise their brokerage. This is true for 99.9999% of them. People supporting this are brokers only.
Surveyors being a professional body their professional qualifications will not vanish. So it is a welcoming concept to issue Surveyors’ Licence in perpetuity. They may insist fit and live certificate once in 3 or 5 years.
BROKING lobby has done a perfect job. This is retrograde move. There are lot of unethical practices in the field. This step is not warranted at this point of time
The historical decision by Sh Chairman.!!
There never was a need to go thru licence renewal process because the periodic returns submitted and inspections were enough to keep checks and balances. Perpetual license will reduce unnecessary work for both and allow them to focus on more productive areas
This is a very good move by IRDA, But there must be strict regulations for intermediary, otherwise mis selling activities will increase due to perpetuity of license.
This is a much awaited and welcome decision. Of course this rests a heavier responsibility on brokers and is a firm step towards turning into a full fledged SRO.
Interesting and welcomed modification… Hoping for relaxations on Reinsurance FRN regulations by allowing it for 3 years instead of year on year renewal
Insurance surveyors should also be benefited the same way!
This initiative is welcomed.
Mera Desh Badal Raha Hai.
Working environment of a licensed motor surveyor (an intermediatory )post privatisation is extremely strenuous , if it continues the way it is , no youngster will opt for this noble profession.
The matter needs immediate attention .
Tedious rigmarole of renewal of license every three years compounds the woes of a surveyor .
This is indeed a welcome move, and a perpetual license will surely benefit the industry.
It’s Great decision as customer point of view it’s great steps taken by IRDAI indeed great move & vision towards insurance industry development . Thank you🙏
Indeed good move and broad thinking. It will surely help the industry. Great ! Keep going
The IMF are also insurance intermediaries and should be allowed to work in perpetuity in consonance with the brokers.
GOOD DECISION BY IRDAI.IT WILL IMPROVE THE WORKING OF INSURANCE INDUSTRY.
Surveyor profession will face hard time due to this as black sheep from surveyor community (Licensed Surveyor Working For GIC’s) will no more need to renew there license….
Brokers in insurance industry are no saints. Making big money by bypassing rules and using the loopholes appear to be their sole motive. The need of the hour is stricter regulation in broking and not succumbing to the pressure tactics of the brokers’ lobbying.