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Insurance brokers and Motor Insurance Service Providers cannot create a panel of insurers for selling motor insurance policies. The Authority issues this clarification because commission levels are stipulated and panel creation leads to undesirable market practices. Insurance companies must enter into service level agreements with insurance brokers or Motor Insurance Service Providers based on transparent and objective criteria. Additionally, no Motor Insurance Service Provider or insurance intermediary can enter into any agreement with an Original Equipment Manufacturer that influences the sale of motor insurance policies. These rules protect customers from undue influence by Original Equipment Manufacturers.
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[Image omitted. See the official document.]
IRDA/ INT/ CIR/ MISP/ 5 / 01/ 2018 11th January 2018.
Clarification on MISP Guidelines
I. Creation of panel of insurers by insurance intermediary or MISP II. Role and responsibilities of MISP vis-à-vis Original Equipment Manufacturers (OEM's)
It may be recalled that the Authority issued:-
I. Creation of panel of insurers by MISP
The Authority is in receipt of representations, from insurance companies that they are not included in the panel of Insurance brokers/ MISP's as it is not compulsory for Insurance broker/ MISP to empanel all insurance companies for selling motor insurance policies through MISP even if they are willing to enter into Service Level Agreements (SLA).
Hereto attention to guidelines 5 (f) of Guidelines on MISP issued on 31.08.17 and point no.4, of IRDA circular dt.01.11.2017, stating that an insurance intermediary based on an objective and transparent criteria can enter into service level agreement with general insurers for selling motor insurance policies. The Authority is of the view that with the commission / remuneration levels for the insurance intermediaries and MISP being stipulated, the creation of a panel of insurers is restrictive, which can lead to undesirable market practices. Therefore, to remove misgivings in the minds of the stakeholders it is clarified that neither the insurance broker nor the MISP can create such a panel of insurer for selling motor insurance policies. However, the insurance
companies should enter into service level agreements with insurance brokers/ MISPs based on transparent and objective criteria.
II. Role and responsibilities of MISP vis-à-vis Original Equipment Manufacturers (OEM's)
It is reported that the Original Equipment Manufacturers (OEM's) are exercising undue influence both on the insurance intermediary and the automobiles dealer who have become MISP without having corresponding accountability for their actions.
In order to ensure that MISP guidelines work in the interest of the customers, it is advised that no MISP or the insurance intermediary can enter into an agreement with the OEM which has an influence or bearing on the sale of motor insurance policies.
[Image omitted. See the official document.] P.J. Joseph Member (Non-Life)
