Page 54 - Insurance Times February 2021

"The Union Budget indeed as assured by the Finance Minister industry, higher spends on infrastructure i.e. roads, airports,
will lead to aspirational India, economic development of our water pipeline networks will drive demand for fire and
country and a caring society. Through this Budget, the engineering covers. Health insurance coverage should get
Government has focused on infrastructure, rural growth, a boost given the focus on expanding the hospital network
encouraging use of technology and generating employment for Ayushman Bharat. The capital infusion in the state owned
which in turn will benefit the economy. I firmly believe that insurers was necessary and will hopefully encourage better
kind of healthcare facilities in a country determine the life underwriting discipline in the future." said, Bhargav
expectancy of its citizens. By setting up viability fund to Dasgupta, MD & CEO - ICICI Lombard General Insurance
develop and empanel more hospitals in Tier II and Tier III "This is a " LagheRaho" Budget as there were no quick fixes
cities through PPP model under AB-PMJAY and allocating Rs. or grandiose plans but lots and lots of initiatives which will
6,000 crore for the same, will allow beneficiaries to access all help keep the economy on course for the 10% realistic
quality medical treatment. Thus, providing a much needed Nominal GDP growth planned. Big spend push through
boost to penetration of health insurance. Additionally, by National Infra Pipeline, Transport sector and 16 initiatives
proposing this optional new personal income tax regime, on Farm growth should help rural economy and growth.
Government will be putting more money in the hands of Fiscal deficit at 3.5% for Fy 21 is a relief as we stay the course
people which should boost consumption." said, Tapan and yet spend extra within limits. Disinvestments target of
Singhel, MD & CEO, Bajaj Allianz General Insurance.
2.1 L cr will have to be met through LIC, IDBI etc. Overall,
"The budget attempts a balancing act of promoting long time to switch of TV Channels and go back to the hard grind
term growth while maintaining fiscal prudence given the of execution to get the economy on track. So, as we chase
constraints. It pursues long-term measures towards the 5 tn GDP target, its 'LageRaho' for now." said, Mahesh
infrastructure development, higher education, technology Balasubramanian, MD & CEO, Kotak Mahindra General
adoption etc. which is positive. For the non-life insurance Insurance Co.

IRDAI panel for separate payments of vehicle, insurance premium
IRDAI panel has suggested payment of cost of vehicle and insurance premium through separate cheques. IRDAI had
issued MISP guidelines in 2017 with the intention of streamlining the process and bringing the practices of vehicle
insurance, being sold by automotive dealers under the provisions of the Insurance Act, 1938. Motor Insurance Service
Provider (MISP) refers to an automobile dealer appointed by the insurer or the insurance intermediary to distribute
and/ or service motor insurance policies of automotive vehicles sold through it.
In June 2019, the regulator had set up a committee to review the MISP guidelines. The panel has submitted report in
which it has made various recommendations for orderly conduct of motor insurance business through MISP channel.
Among other issues, the panel examined the current practice of collecting the premium payment from the customer
while soliciting the motor insurance policy. Under the present system, it said there is a lack of transparency in the cost
of insurance premium when the customer buys the vehicle for the first time through the automotive dealer and makes
the payment through one single cheque.
As the MISP makes payment to the insurance company from his own account, "the customer does not know the
insurance premium being paid as it is subsumed in the cost of the vehicle", the committee said. It suggested that this
lack of transparency is not in the interest of the policyholders' interest as the true cost of insurance is not known to
the customer. "The customer may not be aware of the coverage options and discounts available in the process. The
customer also cannot negotiate with the MISP to get the best coverage at the optimal price."
The committee recommended that the customer should make payment to the insurance company directly which is
facilitated by the MISP. "MISP shall not collect the insurance premium amount in its own account and then transfer the
same to the insurance company," it added. According to the report, the motor insurance business sourced by MISPs
through brokers and insurers put together constitutes around 25 per cent of the total motor insurance business or around
11.25 per cent of the overall general insurance business. In its report, the committee said that given the potential
opportunity for motor insurance business through the MISPs, there is a need to develop and strengthen regulatory
framework and supervision activities for this distribution channel. The panel has also made recommendations on the
original equipment manufacturers (OEMs). It noted that OEMs wield tremendous influence over the automotive dealers.
The Insurance Times, February 2021