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The Insurance Regulatory and Development Authority (Irda) has assured the broking community that it would address issues raised by the latter, such as high penalties, short-term licences and service tax on reinsurance brokers.
In a meeting with the Insurance Broking Association of India (IBAI) representatives and intermediaries from companies, in Hyderabad today, Irda chairman T S Vijayan was sympathetic to their issues, said an official, who did not want to be named.
According to sector officials, brokers have demanded a reduction in penalties. They have argued that as their size is smaller as compared to an insurance company, they cannot be treated on the same footing as insurers while imposing penalties.
The parties concerned have been given time till May 31 to give their suggestions on the issues and solutions.
After this, Irda will take a decision.
Among the other issues discussed was the necessity for having long-term licences for brokers. According to the Insurance Act, 1938, a broker’s licence is valid for only three years, after which it has to be renewed.
While Irda has expressed solidarity in resolving this issue, the Insurance Act will have to be amended and the Insurance Bill passed in Parliament for the changes to come into force. The broking community is also looking at approaching the Parliamentary Committee on Finance to resolve the issue.
Service tax was another issue that came up in today’s meeting. Till last year, there was no service tax imposed on insurance brokers. However, in July 2012, it was decided that reinsurance brokers would also come under the purview of service tax. Brokers said this would eat away their profits as a large percentage of it would be utilised to pay service taxes. This issue too, since is a taxation issue, will have to be resolved by the finance ministry, and the broking officials are planning to take it up with the ministry.
The draft report by the Irda committee on insurance broking has suggested certain amendments to the insurance broking regulations.
While the ceiling on business from one client has been increased to 50 per cent, the period of re-application for licence by broker has been set at after one year from date of cancellation.
DD Singh appointed whole-time member at Irda
D D Singh has been appointed as whole-time member (distribution) in the Insurance Regulatory and Development Authority. Singh will hold the post for five years or till attaining the age of 62 years or until further orders whichever is the earliest.
Last year, Irda had invited applications for the post of member-distribution. Prior to his appointment, Singh was a zonal manager for Life Insurance Corp of India. Singh will be responsible for handling matters related to agents, intermediaries and their licensing requirements.
This post has been carved out for the first time.
Previously, these matters were handled by the member (life) and member (non-life).
