The Hindu Business Line : IRDA restores special discount on marine hull

The decision, according to sources, follows the representations made by the Indian National Ship Owners' Association (INSA) opposing the IRDA circular on June 8 withdrawing the special discount.

The insurance committee of INSA has recently submitted to the regulator a detailed representation highlighting a number of issues on the subject. Sources told Business Line that the INSA representation stated that the presence of a tariff regime in marine hull portfolio of insurance business had deprived the ship owners of getting the most competitive rates, terms and conditions that were available to their competitors in the international markets.

In the June 8 circular, the IRDA had made it clear that owner's discount would stand restricted to 10 per cent wherever applicable as per marine hull tariff instead of 15 per cent towards discount to owners and commission to agents.

No special discount in lieu of agency commission/ brokers' remuneration would be payable on marine hull business, irrespective of the paid up capital structure.

Stating that the new guidelines would come into effect from July 1 and would be valid till the end of current fiscal, the regulator said the agent or broker would be eligible for commission/ remuneration as per the scale indicated.

Reacting to this, the INSA representation has indicated that the Association did not make a special representation before the Expert Committee appointed by the IRDA to look into the aspects of remuneration to insurance agents and insurance brokers.

They believed that the dispensation of five per cent special discount in lieu of agency commission/ brokers' remuneration was applicable to all tariff business, of which marine hull had always remained a part, and not merely restricted to fire and engineering classes of tariff business.

Accordingly, the INSA representation urged the insurance regulator to ensure that whatever dispensation was available to fire and engineering should also apply to marine hull.

The insurance regulator has through a latest circular, directed that in addition to owner's discount of 10 per cent wherever applicable, the ship owners would also be eligible for five per cent special discount in lieu of agency commission/ brokers' remuneration until further orders if the business was placed with the insurance companies directly without utilising the services of either agents or brokers.

In a circular issued on Tuesday, the IRDA Chairman, Mr C.S. Rao, said: "All the ship owners and INSA are now given another opportunity to represent their case before the Authority within three months of the issue of this circular, to enable it to consider their views and take a final decision."

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