Insurance Regulatory and Development Authority (Irda) has released an exposure draft to regulate opening of new places by insurance companies. As per the draft, insurers who have completed 10 years of business have to ensure that at least 25 per cent of the proposed new places of business should be in places with population of 1,00,000 or below.
Irda, in the draft, has asked insurers to have in place the Board approved Business Expansion Programme for every financial year. "The Business Expansion Programme shall, in addition to the business plans of the Insurer,contain the proposals, if any, for opening new places of business taking into account the need for opening new places of business not only in the urban centers but also in semi-urban and rural centers," said Irda.
Irda called for the Business Expansion Programme to specifically contain the names of places of business proposed to be opened during the said period. Substitution of the places submitted in the annual plan would not be allowed. Also, insurers have been asked to have a solvency ratio of at least 1.50 in the preceding three financial years.
The insurance regulator further said that insurers may approach Irda for any urgent proposals regarding opening of new places of business, in rural/ semi urban areas, anytime during the year in addition to the proposals submitted under the annual Business Expansion Programme, which would be considered on merit.
The draft said that new places of business approved should be opened within a period of one year from the date of approval letter of the Authority and after the expiry of the time limit, the approval would expire.
The regulator said that all the new places of business opened should offer policy holders' services such as collection of premiums/proposal deposits and status confirmation of policy service requests. Further, it called for a minimum of 2 months advance notice on the proposed relocation/closure to be notified to policyholders serviced by that place of business.
All stakeholders have been asked to give their their views before 31 December, 2012.