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Insurance brokers seek lower minimum capital requirement

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3i Infotech solution for interaction with insurers

INSURANCE BROKING EXCHANGE: Mr Bharat Boda (right), President, Insurance Brokers Association of India, and Mr Hari Padmanabhan, Deputy Managing Director, 3i Infotech, at a press conference in Mumbai on Monday. - Shashi Ashiwal
INSURANCE BROKING EXCHANGE: Mr Bharat Boda (right), President, Insurance Brokers Association of India, and Mr Hari Padmanabhan, Deputy Managing Director, 3i Infotech, at a press conference in Mumbai on Monday. - Shashi Ashiwal

Our Bureau

Mumbai, Sept. 18

Insurance brokers are seeking a reduction in minimum capital requirement for securing a licence.

Currently, an insurance broker is required to have a minimum capital base of Rs 50 lakh while for a composite broker who also does reinsurance business, should have a higher limit of Rs 2.5 crore. The broking community contributes around 15 per cent of the non-life premium.

Mr Bharat J. Boda, President, Insurance Brokers Association of India, said the brokers' suggestion would be to halve the minimum capital requirement to Rs 25 lakh and Rs 1.25 crore respectively.

The Insurance Regulatory and Development Authority, which had set up an expert committee in July to address broker related issues, has been receiving representations from the Insurance Brokers Association of India on the same.

The expert committee, which has been holding meetings at different cities, will have its final meeting next month. The expert committee, headed by Mr G.K. Raman, Chairman Royal Sundaram Alliance Insurance Company Ltd, has been discussing issues such as relaxation in the norms for issuing licences and increasing the compensation to brokers.

IBAI has also sought the introduction of co-broking and sub-broking arrangements, which are currently not allowed.

"An insurance broker in Mumbai should be allowed to appoint a sub-broker in Chandigarh to do business. Brokers should also be allowed to have co-broking arrangement where there is sharing of remuneration," said Mr Boda. He was speaking to reporters on the sidelines of the launch of 3i Infotech's Premia Insurance Broking exchange (IBX).

Subscription-based tool

Premia Insurance Broking exchange (IBX) is a subscription based Internet solution for the insurance business. Premia IBX will provide a pay-per use platform where insurance brokers can interact with insurance companies to provide the best possible cover to consumers.

Mr Hari Padmanabhan, Deputy Managing Director, 3i Infotech said the company was in talks with more than 200 brokers and all the 30 insurance companies for selling the solution.

(This article was published in the Business Line print edition dated September 19, 2006)
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