Page 11 - Insurance Times Octoberr 2022

ing the insurance penetration in coun- of non-life business subject to an over- Sathe pointed out that it is not clear
try," it said. all cap of 20%. There is also an overall what is the clawback mechanism for
expenses cap of 30% for non-life and companies that promise to meet the
IRDAI proposes to make is- 70% for life companies. Linking commis- statutory expense ratio to avail the flex-
sions to the overall expenses cap also ibility on commission but fail to do so.
sue of insurance policies in
ensures that only the efficient insurance
demat form mandatory companies with lower costs will have IRDAI to build comprehen-
the headroom to pay more commission.
Insurance regulator has proposed man- sive portal for resolving
Similarly, in the life sector, there are
datory issuance of all insurance policies
relaxations on commissions on certain policyholders' complaints
in electronic form. A senior insurance
lines. IRDAI is building a comprehensive por-
executive confirmed the development
and said that this will be done through Analysts tracking insurance companies tal for complaints redressal of policy-
Insurance Repository (IR) system. have broadly welcomed the relaxations. holders. The portal is expected to be
However, former regulators have some ready by the end of December this year,
"All stakeholders have agreed. We ex-
concerns. said Bejon Kumar Misra, Consumer
pect the notification to be issued soon,"
Policy Expert and Member of Advisory
he added. Separately, IRDAI may also "Even in a rapidly changing economic
Committee, IRDAI.
make sharing know-your customer or world, there are some fundamental
KYC details mandatory while purchas- principles that remain unchanged. All "This portal will be ready mostly by De-
ing a general insurance policy. the expenses that insurers incur are cember-end, and will be a new year gift
paid out of policyholders' funds. The for citizens and policyholders from the
At present there are four insurance re-
positories - NSDL National Insurance restrictions on commission and manage- IRDAI," said Misra when asked about
ment expenses in the law were to en- the timeline for launch of the compre-
Repository, CDSL Insurance Repository
Ltd, Karvy Insurance Repository Ltd, sure that insurance companies conduct hensive dedicated portal.
CAMS Insurance Repository Services their basic function of managing the Misra was in the National Capital at the
Ltd. Dematerialisation essentially pool of policyholders' funds at minimal
office of Insurance Ombudsman of Delhi
means converting physical documents cost," said IRDAI's former non-life as part of a new initiative ofIRDAI, re-
into online format. member K Srinivisan. He added that if
quiring its advisory committee members
some companies recklessly increased
The move to dematerialize insurance to visit all 17 Insurance Ombudsman
commission, it would defeat the pur-
policies is an attempt to promote fur- offices across the country and come up
pose. "Ultimately, it is the policyhold-
ther digitisation, and consolidation of with suggestions to improve the Om-
ers who have to pay for the exorbitant
records for benefits of policyholders, budsman scheme rolled out by the Fi-
costs of insurers, which will result in an
the above quoted executive said. "This nance Ministry in 2017.
abnormal increase in premiums," he
may get applicable for new policies by
The Bima Lokpal (Insurance Ombuds-
added.
December this year, or January 2023.
man) Scheme is an Alternate Grievance
For existing policies the deadline to According to IRDAI's former member
Redress platform set up by the IRDAI,
dematerialise them will be December (life) Nilesh Sathe, there was a commis-
through the Council for Insurance Om-
2023," he added. sion ceiling of Rs 10 lakh on group-
budsmen, Mumbai, aiming at resolving
funded policies like gratuity and annu-
the grievances of the aggrieved insur-
Insurers may pass on com- ity or superannuation. Removing the
ance policyholders and claimants against
cap may result in higher churn and un-
mission costs insurance companies and their interme-
healthy practices for businesses of large
diaries, speedily and cost-effectively
Former members of the IRDAI fear that
companies. "Short-term premium prod-
the regulator's proposal to grant flex- There are 17 Insurance Ombudsman
ucts' commission rates are enhanced
ibility to insurers on commissions might
and will apply to new policies. For a 5- centers in the country, which cover all
result in them passing on related costs States and UTs. All offices of the Insur-
year premium-paying term policy, the
to policyholders.
commission payout will be 25% higher. ance Ombudsmen put together dis-
Recently, IRDAI proposed to lift the ceil- It will impact the internal rate of re- posed of 40,527 complaints during
ing on commissions on individual lines turn of these policies," he added. 2021-22.
The Insurance Times, October 2022 11