The Insurance Regulatory Development Authority has temporarily stopped issuing licences to corporate agents.
The Irda is reviewing the performance of corporate agents and is reportedly upset with the manner in which most corporate agents are not disclosing information to the Irda.
Speaking on the sidelines of the International Conference on Regulatory Practices and Emerging Trends in Life Insurance, held here today, C S Rao, chairman of Irda said, "We have decided to stop giving licences to corporate agents as of now. A final decision on this issue will be taken possibly by December," he added.
Rao said, "In the existing system a person who is qualified to be an agent can directly get a licence from the company he wishes to sell products for and the same is applicable to corporate agents. The matter of concern is that to what extent the agents are disclosing information to the insurers and the Irda wants to review this information."
He said that the insurance sector has come a full circle with the decision of the government to free it from monopoly and allow private participation. Our regulatory laws, however, do not provide for any flexibility for speedy and effective response to changing circumstances.
"We need to develop alternative distribution channels, make serious efforts in rural and social sectors and increase our insurance penetration," said Rao.
He added that the central government has recently set up a consultative committee on promoting micro-insurance initiatives and this will help Irda to increase the penetration of insurance in the country.
Sunil Mehta, chairman of American Chamber of Commerce said that the Indian insurance industry is expected to grow from the existing three per cent of GDP to eight per cent by 2010.
"India today stands at the threshold of being one of the most attractive markets for insurance in the world with insurance products undergoing a rapid change. However, like all evolving industries, the process of learning will be slow. This should not dissuade us from undertaking bold reforms," Mehta added.
Regarding the issue of multiplicity of regulators Mehta said that it is speculated that there may be an addition in this front with the creation of the pension regulatory development authority.
He added that though each of these regulators oversaw an important part of the financial services spectrum, a common institute for financial service regulations could help in synergising the services.
"The recent proposal of the government to increase foreign equity participation is a step in the right direction as insurance requires capital to maintain solvency and honour commitments to policyholders," said Mehta.
Venkatesh Mysore, CEO, Metlife India said that the insurance sector needs to focus on product innovations and packaging for better customer service.
"Fast-track approval, freer insurance and greater exchange programmes with foreign regulators is required for better growth in the insurance sector," said Marc Bastien, head, Actuarial services, Munich Re, India. He added that disability coverage is an area that needs review in India.
John Vieren, partner, Pinnacle consulting, Hong Kong said that in the recent years product innovations like female-specific products and single-premium products have become popular. He added that policies, which cover diseases treatable by medicines can be introduced in India.
The seminar also discussed issues like building a self regulatory framework, risk-based capital to safeguard policyholder's interest, relevance of embedded value in measuring success of life insurers and tax treatment of life insurance products and companies.
