BackAuto dealers can act as sub-brokers for motor insurance: Irdai panel
The motor insurance business sourced by MISPs through brokers and insurers constitutes around 25% of the total motor insurance business
PremiumThe committee to review the motor insurance service provider (MISP) guidelines on Wednesday suggested that automotive dealers can act as one of the distribution channels on a stand-alone basis, soliciting motor insurance business similar to insurance brokers.
MISP is an automobile dealer appointed by the insurer or the insurance intermediary to distribute or service motor insurance policies of automotive vehicles sold through it. The MISP guidelines were first issued by the Insurance Regulatory and Development Authority of India (Irdai) in August 2017 to bring orderly conduct in the matter of distribution of motor insurance business through motor dealers.
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The regulator in June 2020 had set up the panel to review the practices under the guidelines.
The committee noted that the motor insurance business sourced by MISPs through brokers and insurers constitutes around 25% of the total motor insurance business or around 11.25% of the overall general insurance business in India.
“In order to develop the MISP as another robust channel of distribution of motor insurance policies, the committee makes the following suggestions: automotive dealers as one of the distribution channel on stand-alone basis soliciting motor insurance business similar to insurance broker representing the customer with conditions such as i) mandatorily have agreements with all insurers; ii) prohibited from collecting premium; iii) provide access to customers to make a direct online payment to the insurer," the committee said in its report.
“Alternatively, the automotive dealer may become a sub-broker or a sub-agent and work for a broker or a corporate agent, respectively," it added.
On sponsorship of MISPs, the panel suggested that they can be sponsored by either an insurance intermediary or any one or more of the insurance companies at the same time.
“All insurance companies may be directed either to develop a portal or app or use the existing electronic or e-commerce platform through which insurance policies shall be issued. The electronic platform or portal shall have no functionality or mechanism built into it that can alter, modify or change the premium quoted by the insurance company," the committee said.
The panel has also suggested that the original equipment manufacturer (OEM) should be brought into the regulatory ambit by including OEM in the definition of MISP. “The OEMs shall be equal to MISP and will be subject to all the provisions of MISP Guidelines. They shall give the list of their authorized-dealers and authorized sub-dealers to Irdai and that list can be uploaded at IIB (Insurance Information Bureau) for generating unique identification numbers of the MISP," the report said.
On premium payment, the committee said the amount must be done through a single check and the customer should make payment to the insurance company directly, which is facilitated by the MISP.
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