BUSINESS

Protest against IRDA notification

CHENNAI JUNE 26. The National Confederation of General Insurance Officers' Associations has protested against the notification issued by the Insurance Regulatory and Development Authority (IRDA) dispensing with the facility of a discount of 5 per cent in lieu of commission/brokerage on business placed directly by non-public sector clients with insurance companies.

The Secretary General of the confederation, Par Oli, said the notification issued on May 30, overruled an earlier notification of March 22, which stipulated that no brokerage/commission shall be paid on the business of government and public sector enterprises, which would have to place their business directly with insurance companies, and that a discount of 5 per cent would be allowed on business placed directly by non-public sector clients with insurers.

The revised notification, Mr. Par Oli said, "is totally against the interest of the general insurance industry and the insuring public.'' It was unconstitutional to prevent the scope for the insured to place his business directly with the insurers and gain a discount of five per cent on the premium. "The brokers should, by dint of their service, earn the confidence of clients and persuade them to place their business with the brokers, and should not be mollycoddled by denying clients the privilege of a discount on business placed directly with the insurers,'' he said. "The insured should not be made to suffer merely to benefit brokers and the IRDA should not be a party to such a policy regime,'' Mr. Par Oli observed, talking to The Hindu. He said public sector general insurance companies, unlike many newcomers to the industry from the private sector, were fully equipped with the skill and staff to take care of the many-sided needs of clients in both the private and public sectors. That was the reason why these clients used to place their business directly with the public sector companies. Also, there were several big clients (insured) in the private sector who had specialised departments and staff dedicated to risk and insurance management and would not need the services of a broker or even advise/consultancy from insurance companies on their business. They should continue to get the benefit of a discount for business placed directly with the insurers, be the latter in the public or private sector.

The revised notification was certainly against the legitimate interests of the public sector insurance companies, which were in a better position to attract direct business of private sector clients, Mr. Par Oli said.

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