The Insurance Regulatory and Development Authority (Irda) has proposed an exposure draft to regulate opening of new offices by insurance companies. According to the draft, insurers that have completed 10 years of business have to ensure at least 25 per cent of proposed new offices be in places with a population of 1,00,000 or below.
Irda, in the draft, has asked insurers to have in place a board-approved Business Expansion Programme for every financial year. Irda said the Programme shall, in addition to the business plans of the insurer, contain proposals, if any, for opening new offices, taking into account the need for it not only in urban centres but also in semi-urban and rural centres. Irda called for the 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.
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The regulator said insurers might approach Irda for any urgent proposals regarding opening of new areas of business in rural/semi-urban areas anytime during the year, in addition to the proposals submitted under the annual Programme, considered on merit. The draft said new places of business approved should have offices within a period of one year from the date of approval letter of the authority. After the expiry of the time limit, the approval would expire.
The regulator said in new places of business the companies should offer policy holders’ services such as collection of premiums/proposal deposits and status confirmation of policy service requests. It called for a minimum of two months’ advance notice on the proposed relocation/closure to be notified to policyholders serviced by the offices in a particular place of business. All stakeholders have been asked to give their their views before December 31.
