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Kolkata: The heat in the insurance sector is spilling over to its ancillary businesses.
Next up is insurance broking - a model largely used in the non-life business - which is likely to see significant discounting of rates, once promoter houses of insurance firms float their own broking outfits. The Insurance Regulatory & Development Authority (Irda) had allowed the same in April.
Within the community, the tension is palpable and insurance brokers are worried. Although no broker contacted by DNA Money was willing to go on quote, they feared the Irda move could skew the playing field.
A broking company under the same corporate entity promoting an insurance firm would allow the promoter-owned brokers to discounted prices, they said.
Unlike insurance agents, insurance brokers are not tied to any particular insurer, and have a larger role to play as they are also associated with risk management, inspection, premium rating and even claims settlement for their clients.
There are 275 insurance brokers in India, who at present bring in 25% of the business in the non-life sector. But the business is small in scale, especially when compared to developed markets, where big brokers are almost as large as the insurance companies.
The business, many brokers felt, seemed headed to the 'next level' without having attained the maturity in its current stage.
“With most of the broking community not too mature, the insurance business does not seem ready for this,” one broker said on condition of anonymity. “There is an element of apprehension for renewal cases, when an in-house insurance broker could prompt its group insurance company to place lower quotes on the account which was structured by another broker a year back.”
Abroad, the broker said, the markets “are extremely mature and are armed with regulations”.
Rahul Aggarwal, CEO, Optima Risk Management Services, said, “Changes are good and it is early to predict what will happen. But if we are moving to the next level, the regulator should create a strong monitoring and complaint redressal system for problems which could arise on the issue of discounting rates.”
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