Attention is drawn to Authority’s order ref no. IRDA/ NL/ ORD/ CMT/ 199/ 11/ 2015 dated 13.11.2015 constituting a committee on motor dealer payouts on motor insurance business. The committee submitted its report to the Authority dated 31.5.2016. Based on the examination of the report of the committee and the interaction held with insurers and other stakeholders the Authority frames the following guidelines on Motor Insurance Service Provider.

(a)“Act” means the Insurance Act, 1938;

(b)“Authority” means the Insurance Regulatory and Development Authority of India established under sub-section (1) of Section 3 of the Insurance Regulatory and Development Authority Act, 1999 (41 of 1999);

(c)“Automobile Dealer” means a person who is an authorised dealer or a sub-dealer of an automobile manufacturer for selling new or used automotive vehicles.

(d)“Automobile Manufacturer” means a person who is the original equipment manufacturer (OEM) of the automobile.

(e)“Distribution fees” means the amounts paid to the MISP directly by the insurer or by the insurance intermediary as the case may be.

(f) “Motor Insurance Service Provider (MISP)” means an automobile dealer appointed by the insurer or the insurance intermediary to distribute and/ or service motor insurance policies of automotive vehicles sold through it.

i)    policy service delivery such as generation of motor insurance policy, receiving instructions from customers with respect to amendment, endorsement, modification, renewal, cancellation, and extension of motor insurance policies.

ii)   claim service delivery such as guiding and assisting the policyholder on insurance claims documentation, claims servicing excluding activities such as claim assessment, claim survey or loss adjustment and settlement.

iii) any other service that may be specifically permitted by the Authority

(h)Words and expressions used and not defined in these guidelines but defined in the Insurance Act, 1938 (4 of 1938) or Insurance Regulatory and Development Authority Act, 1999 (41 of 1999), shall have the meanings respectively assigned to them in those Acts, Rules, Regulations, Guidelines issued under those Acts as the case may be.

 

 

b)       On receipt of request from the MISP, the sponsoring entity shall verify the eligibility conditions given in guideline 4 above.

c)       On being satisfied, the sponsoring entity(ies)shall appoint MISP and issue the appointment letter in the format given in Annexure “1”.

(c)    The MISP shall also comply with the provisions of the Insurance Act, 1938, the IRDA Act, 1999, the Regulations made there under, guidelines and circulars issued by the Authority from time to time.

 

 

(a) The appointment of a MISP shall be normally valid unless revoked in case of insurers and valid as long as the certificate of registration is valid in case of insurance intermediaries.

(b) However the Authority may cancel the appointment at any time, if it is of the view that the activities carried out by the MISP is:

                 i.       not in the interest of the policyholders

                ii.       not conducive for the orderly growth of the industry

               iii.       violating the code of conduct given in Chapter III

              iv.       not meeting the requirements as specified in these guidelines

               v.       in violation of the provisions of the Insurance Act, 1938, IRDA Act, 1999, Insurance Rules, Regulations Guidelines, circulars, orders, notices etc issued by the Authority.

Provided that before canceling the appointment, the MISP shall be given an opportunity of being heard.

(a) A periodic review of the controls, systems, procedures, and safeguards put in place by the MISP, shall be carried out, at least once a year, by the sponsoring entity(ies).

(b) The scope of such review of the MISP shall also check compliance to the Act, Rules Regulations, circulars, guidelines, etc issued by the Authority in addition to these guidelines.

(c) The review shall be placed before the Board of the sponsoring entity or its sub-committee for their observations.

(d) The Authority has the right to undertake by itself or through an external agency an independent inspection into the affairs of the MISP at any time if it so desires.

10.   Every MISP shall:-

(d)   make available to the policyholder a copy of the insurance policy in electronic form;

(e)    have a separate dedicated Bank Account linked to the MISP PAN number in which all payments are received from insurer(s) or insurance intermediary;

(f)    ensure issuance of receipt of the insurer on receiving insurance premium;

(k)   furnish any information as required by the Authority relating to insurance business;

(l)     submit periodical returns as required by the Authority;

(m)cooperate in any inquiry conducted by the Authority;

(o)   comply with any other requirement which the Authority may specify.

 

11.   Every MISP shall not:-

(c)    deny the prospect his rights and options to seek motor insurance policy or renewal of motor insurance policy from any insurer or insurance intermediary;

(h)   directly or indirectly influence the claims for inflating its revenue;

 

14.   Further:-

2.    Disclosures –

a.      The MISP shall ensure that only those features of the motor insurance policies which are approved by the Authority under Product filing procedure are shared with the policyholder.

b.      Any information which is detrimental to the interests of the policyholder or is misleading and is not approved by the Authority shall not be used by the MISP.

3.    Products – The MISP shall distribute and/ or service motor insurance policies including add-ons only.

4.    Pricing – The pricing of every motor insurance policy shall be decided by the insurer and it shall be the responsibility of the insurer to ensure that motor insurance policy pricing is in compliance with that approved by the Authority.

7.    Compliance to KYC/ AML norms – The MISP shall be responsible for compliance of the directions issued by the Authority or any other statutory Authority for compliance of KYC/ AML matters.

8.    Creation of e-Insurance Account –The MISP shall facilitate the creation of e-insurance account of the prospect.

9.    Issuance of e-Insurance policies –The MISP shall facilitate issuance of e-insurance policies in accordance with the IRDAI’s (Issuance of e-insurance Policies) Regulations, 2016

10. Grievances –

a.      The sponsoring entity(ies) and MISP shall have in place a mechanism to address policyholders’ grievances.

b.      The grievances of policyholders shall be attended to in the time frame specified by IRDA (Protection of Policyholders Interest) Regulations, 2017.

c.      The grievances registered shall be managed through the Integrated Grievance Management System put in place by the Authority.

11. Compliance – The CEO/ Principal Officer, the Compliance Officer and CFO of the insurer shall certify that they have neither paid to the insurance intermediary and the MISP remuneration and rewards nor paid them or their associates either directly or indirectly any amounts in excess of limits specified under these guidelines.

12. Reporting requirements –The insurer, insurance intermediary and the MISP shall submit to the Authority the reports as specified by it.

14. Other issues - The MISP shall immediately report to the Authority any regulatory or supervisory action taken by any Government or other Regulatory Authorities with full details and the penalty, any administrative action, if any imposed and the remedial steps taken by it to prevent its recurrence with regard to the MISP.

b.    In case there are more than one sponsoring insurers of a MISP, then all such insurers shall be jointly and severally liable for the actions of the MISP and open for penalties given below.

d.    Any violation of these guidelines or the directions issued by the Authority in this regard may entail one or more of the following actions on the insurer, insurance intermediary and MISP jointly and severally.

                          i.       Restriction on performance incentive to Managing Director (MD) / Chief Executive Director (CEO) / Whole-Time Directors (WTD)and Key Management Persons (KMPs);

                         ii.       Removal of Managerial Personnel and / or appointment of Administrator;

                        iii.       Direction to not underwrite new business in case of violation of these Guidelines.

                        iv.       Graded Penal action under section 102 of the Act;

                         v.       Any other action as specified in the Act.

e.    Notwithstanding such directions, the insurer shall continue to service the existing policyholders in such segments.

a.    the Authority shall have the right to call, inspect or investigate any document, record, or communication from the MISP.

b.    Where the Authority is of the opinion that the operations of the MISP are not in the interests of the Indian market or the insurance policyholders, the Authority reserves the right to take appropriate steps including suspension or cancellation of appointment.

c.    Power of the Authority to issue clarifications: In order to remove any difficulties in respect of the application or interpretation of any of the provisions of these Guidelines, the Chairperson of the Authority may issue appropriate clarifications from time to time.

 

P.J. Joseph

Member (Non-Life)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(a)    ensure that any documents issued comply with all statutory or regulatory requirements from time to time in force;

(b)   send policy documentation without avoidable delay,

(c)    make available, with policy documentation, advice that the documentation shall be read carefully and retained by the client;

(d)   not withhold documentation from its clients without their consent, unless adequate and justifiable reasons are disclosed in writing and without delay to the client. Where documentation is withheld, the client must still receive full details of the insurance contract;

(e)    acknowledge receipt of all monies received in connection with an insurance policy;

(f)    ensure that the reply is sent promptly or use its best endeavours to obtain a prompt reply to all correspondence;

(g)    ensure that all written terms and conditions are fair in substance and set out, clearly and in plain language, client~s rights and responsibilities; and

(h)   make available to any new registered entity instructed by the client all documentation to which the client is entitled.

 

(a)    ensure that statements made are not misleading or extravagant;

(b)      where appropriate, distinguish between contractual benefits which the insurance policy is bound to provide and non-contractual benefits which may be provided;

(c)      ensure that advertisements contain nothing which is in breach of the law nor omit anything which the law requires;

(d)      ensure that advertisement does not encourage or condone defiance or breach of the law;

(e)      ensure that advertisements contain nothing which is likely, in the light of generally prevailing standards of decency and propriety, to cause grave or widespread offence or to cause disharmony;

(f)       ensure that advertisements are not so framed as to abuse the trust of clients or exploit their lack of experience or knowledge;

(g)      ensure that all descriptions, claims and comparisons, which relate to matters of objectively ascertainable fact shall be capable of substantiation.

 

 

(a)      ensure that its staff are aware of and adhere to the standards expected of them by this code;

(b)      ensure that staff are competent, suitable and have been given adequate training;

(c)      ensure that there is a system in place to monitor the quality of advice given by its staff;

(d)      ensure that members of staff are aware of legal requirements including the law of agency affecting their activities; and only handle classes of business in which they are competent;

(e)      draw the attention of the client to Section 41 of the Act, which prohibits rebating and sharing of commission.

 

a)      Every sponsoring entity and MISP shall support industry education initiatives aimed at explaining insurance to consumers and the community.

b)      Every sponsoring entity, its employees and MISP shall make readily available to client:

(i)     Up-to-date information on motor insurance;

(ii)   Information to assist insured to determine the level of insurance cover they may require; and

(iii)Information about motor insurance products, services and this Code.