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Non-life insurers asked to withdraw packaged products

Our Bureau

Hyderabad , July 22

THE Insurance Regulatory and Development Authority (IRDA) has advised the non-life insurers who were issuing policies that were in contravention of the tariff regulations to immediately withdraw such products from the market and report to the regulator.

In a circular issued to the non-life insurance players on Wednesday, the IRDA Chairman, Mr C.S. Rao, said the authority had come across certain instances where the non-life insurers were deviating from the tariff rules and other provisions in the guise of offering package products and in the process charging commission and brokerage beyond the limits prescribed for tariff business.

The products under review mainly provide cover for the building, contents, stocks against fire, allied perils, loss of profit, machinery breakdowns, project insurances, electronic equipment insurance in various industries, in association with certain non-tariff covers pertaining to burglary, theft, personal accident, cash in transit, mediclaim etc.

According to Mr Rao, the policies being marketed are normally named as asset all risk policy, property all risk policy and business enterprise policy, etc for covering industrial and manufacturing units.

"The Authority wishes to make it clear that the filing and use of such products under the `File and Use' system was strictly subject to the compliance of respective tariff rates and provisions and the circular pertaining to commission/ brokerage," the IRDA Chairman said.

However, according to Mr Rao, "In actual practice, the operational offices of the insurers are marketing them entirely as non-tariff products violating tariff rates and prescribed rates of commission/brokerage to woo the agents/brokers and customers in violation of IRDA's Protection of Policy Holders' interest, advertisement and disclosure regulations.

While advising the insurers who were issuing policies in contravention of the tariff to withdraw such products from the market, the IRDA Chairman asked the insurers to file the revised products with the Authority after ensuring that the rates, terms and conditions of tariff were not violated and the commission/ brokerage payable was regulated as per the limits prescribed on tariff and non-tariff business respectively.

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