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Financial Sector Assessment Program

This technical session delves into the importance of regulations to protect consumers and boost confidence in the financial sector. Key points covered include professionalism, safeguarding client funds, and clarity in broking regulations. The session emphasizes the need for intermediaries to provide clear information to customers and for regulators to take action against unlicensed entities. Explore how strengthening regulations can enhance consumer protection and systemic risk management in the insurance industry.

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Financial Sector Assessment Program

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  1. Technical Session IV December 29 ‘ 2010 Financial Sector Assessment Program Sanjay Kedia, Marsh India

  2. ICP 24 - Intermediaries ‘….Essential to Protect Consumers and promote confidence..’ The regulations at large covers all “Essential Criteria” of ICP 24

  3. ICP 24 – Feedback on Practice • b) …Intermediaries to have ……professional knowledge and ability as well as having a good reputation. • Broking community has gone through challenges in earning reputation of larger system • Brokers represent Policyholders interest: Regulator may be more inclusive and consider them to be part of various committees on policy matters

  4. ICP 24 – Feedback on Practice • d) ..an intermediary who handles client’s money to have sufficient safeguards in place to protect these funds. • Reinsurance Broking : May be strengthened further • Direct Broking : Broking regulations (23) need to have more clarity. Globally brokers handles premium and claim collection providing customer convenience and efficiency in administration • Coinsurance: • Lead Insurer in Indian context effectively handles client money for other coinsurers • Coinsurance sharing without knowledge of policyholder creates further complexity Coinsurance requires clarity for Policy Holders interest and to Manage Counter Party risk / Systemic Risk in case of insurer failure

  5. ICP 24 – Feedback on Practice • e) ..Intermediaries to give customers information on their status, being independent or associated with particular insurance companies… • Agents of different Insurers within a family confuses policyholders as it mimics the nature of a Broker • f) Authority to have powers to take action against entities that are intermediation without license or registration • Regulation 17 of Insurance Brokers prohibits this. • International reinsurance brokers without license at times still conducts reinsurance broking with insurance company • lack of awareness of Broking regulations among Insurance Companies seems to be cause

  6. Thank You www.marsh.com Leadership, Knowledge, Solutions…Worldwide.

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