IRDA puts checks on mega covers

Insurance regulator IRDA has barred companies from seeking special discount of 5% in exchange of agency commission for mega risk covers above Rs 1,500 crore from the next fiscal.

IRDA also raised the eligibility criteria from Rs 3 crore to Rs 15 crore for companies to get the special discount.

Big companies will have the option of seeking risk cover for fire, petrochemical, engineering or other businesses covered under the tariff regime directly with the insurer and get a 5% discount.

"If they seek the service of brokers and agents, the companies will not get the discount," the regulator said.

IRDA chairman C S Rao said: "The cover under mega risk policies and project finance above Rs 1,500 crore sum insured will be eligible for brokerage commission irrespective of capital structure, and the insured will not be eligible for the 5% special discount."

Regarding government departments where paid-up capital cannot be determined, IRDA said the special discount will continue as before.