Irda forms panel to examine intermediaries

The Insurance Regulatory and Development Authority (Irda) has constituted a 10-member committee to examine issues concerning the intermediaries structure, a vital link between the insured and the insurer.

The committee, which will be headed by N M Govardhan, ex-chairman of the Life Insurance Corporation of India, will submit its report by December 31.

Over the past few years, Irda had enlarged the scope of the intermediaries structure from the traditional tied individual agent to the corporate agent, micro insurance agent, the bankassurance mode and the referral system. Insurers have also adopted other channels of sales to suit e-selling.

Irda said some of the practices in the system in terms of renumeration or reimbursement of expenses or incentive schemes require detailed examination to ascertain if they conform with the provisions of the Insurance Act and their impact on the acquisition cost.

The 10-member committee members include the chairmen of LIC and National Insurance Company, and managing directors of Max New York Life Insurance, HDFC Standard Life Insurance, Met Life Insurance, Tata-AIG Life Insurance, IFFCO Tokio General Insurance and ICICI Lombard General Insurance.

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TERMS OF REFERENCE

To review the system of licensing of corporate agents and suggest the criteria for their selection

To examine the commission structure existing now and recommend changes, if any. Particularly examine the additional payments to intermediaries and their justification and fairness

To examine the need for a system of referral providers, the guidelines in force and the recommendations on the whole structure including the remuneration paid

To examine the scope of direct marketing, e-marketing, web-enabled sales points and other innovations

To examine the scope of Regulation 10 (ii) of Advertising & Disclosures Regulation 2000 and suggest modifications, if any

To examine the scope of micro insurance agency system and its remuneration

To review the payouts to distribution channels and administrators of group business

To consider any other aspect relevant to rationalise the payments made to agents and referral providers