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ICP – 24 – Intermediaries Suresh Mathur

ICP – 24 – Intermediaries Suresh Mathur. Supervisory Authority sets requirements, directly or through the Supervision of the Insurers, for the conduct of Intermediaries

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ICP – 24 – Intermediaries Suresh Mathur

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  1. ICP – 24 – IntermediariesSuresh Mathur Supervisory Authority sets requirements, directly or through the Supervision of the Insurers, for the conduct of Intermediaries Intermediaries for this purpose include Insurance Agents, Corporate Agents, Insurance Brokers, Insurance Surveyors and Loss Assessors and Third Party Administrators in Health Insurance

  2. Intermediaries are an essential area of supervision in the insurance sector and may have a reputation risk or a prudential impact on Insurers. • Intermediaries serve as an important distribution channels of insurance • They provide interface between Consumers and Insurers • Their good conduct is essential to protect consumers and promote confidence in the insurance markets. • Therefore there is a need for supervision of intermediaries

  3. Essential Criteria • A) The supervisory authority requires intermediaries to be licensed or registered. • Provisions of Insurance Act (sec 42) Prescribes the policy guidelines for licensing • Authority may determine by regulations to issue licence as intermediary / insurance intermediary (Sec 42 D) • All the intermediaries in the insurance sector are licensed and the procedure for licensing is laid down in the respective regulations.

  4. B) The supervisory authority requires intermediaries to have adequate general, commercial and professional knowledge and ability as well as having a good reputation. • Respective regulations on Intermediaries prescribe qualification, training and pre licensing examination criteria for Intermediaries to ensure that only person with adequate professional knowledge are involved in insurance intermediation

  5. C) If necessary, the supervisory authority takes corrective action, including applying sanctions, directly or through insurers, and canceling the intermediary’s licence or registration, when appropriate. • Regulations prescribe Code of Conduct for respective intermediaries. • The Section 42D in the Insurance Act,1938 and relevant Regulations prescribe actions for violations which include penalties/ suspensions/ cancellations.

  6. D) The supervisory authority requires an intermediary who handles client’s money to have sufficient safeguards in place to protect these funds. • Section 64VB mandates that the risk in policy of insurance will commence only after receipt of premium by insurer, further under provisions of this section, any intermediary who is authorized to collect insurance premium shall deposit with, or dispatch by post to, the insurer, the premium so collected in full without deduction of his commission within 24 hours of the collection • Regulation 23 of IRDA Insurance Brokers Regulations, 2002 prescribe the manner in which money collected by Insurance Broker shall be dealt and it ensures enough safeguards with regard to the Protection of these funds.

  7. E) The supervisory authority requires intermediaries to give customers information on their status, specifically whether they are independent or associated with particular insurance companies and whether they are authorised to conclude insurance contracts on behalf of an insurer or not. • Under provisions of regulations which prescribe code of conduct for respective intermediaries mandates that intermediary shall identify himself and the insurance company of whom he is an intermediary. • Code of Conduct prescribed for Insurance Brokers specifically in matters relating to Sales Practices

  8. F) The supervisory authority or other authority must have powers to take action against those individuals or entities that are carrying on insurance intermediation activity without license or reg registration. • As per Section 42 D(8) of Insurance Act, 1938, any person who acts as an intermediary or an insurance intermediary without holding a license issued under this section to act as such, shall be punishable with fine. • Further, as per Section 42 D(8) of Insurance Act, 1938, any insurer or any person who appoints as an intermediary or an insurance intermediary or any person not licensed to act as such or transacts any insurance business in India through any such person , shall be punishable with fine. • Regulation 17 IRDA (Insurance Brokers) provides for penal action under act for any person who acts as insurance broker without holding valid license. This action is without prejudice to initiation of any criminal proceedings against the said person. • Penalty U/S 102 – Upto Rs 5 lacs

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