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You can now approach insurance brokers not only for buying insurance but also to get advice on claim settlements.
The Insurance Regulatory and Development Authority has now permitted insurance brokers to offer limited claim consultancy, of course, for a price.
“It will be in the interest, particularly of the relatively smaller policyholders, to provide an avenue to such policyholders to obtain more competent advice, particularly in the matter of settlement of claims,” Mr J. Hari Narayan, Chairman, IRDA, said in a circular issued here on Thursday.
The broking firms can offer consultancy for claims not exceeding Rs 1 crore if they are not based on polices which have been placed by any other broker.
Written mandate needed
A written mandate permitting the broker to represent the policyholder while dealing with the insurer for the claim is also necessary.
The quantum of fee for claim consultancy can be mutually decided by the insurance broker and the policyholder.
However, it should not be expressed as a percentage of the claim.
Any dispute between two or more brokers arising out of such consultancy arrangements shall, in the first instance, be considered by the Insurance Brokers Association of India.
It would forward the same to the Authority together with its recommendation for final disposal.
The broking industry in India is still relatively new and the expertise of the industry in matters of claims settlement, and so on, is generally not made use of by holders of insurance policies.
“As a consequence, holders of policies, where the risk cover is relatively low, are at a disadvantage when dealing with insurance companies on account of asymmetry of knowledge and information,” Mr Hari Narayan said.
The permission for insurance brokers to offer claim consultancy is expected to help a policyholder in the context.
Allowing brokers to set up a claim consultancy service has been a long-pending demand of insurance brokers.
Brokers welcome move
The brokers association has welcomed the move by the regulator.
“It will be an additional revenue stream for brokers. It is a win-win situation for the consumers and the brokers as they can now utilise the knowledge base of insurance brokers,” said Mr Hemang Jangla, MD and CEO, Havmore Insurance Brokers.
“We welcome the move by the regulator, but we feel that there should be no restriction on the fee settlement,” said Mr V. Sithapathy, Secretary, Insurance Brokers Association.
However, Mr Arvind Laddha, CEO, Vantage Insurance Brokers, said that it does not open up the claim consultancy field completely, as brokers cannot settle a claim bought by the policyholder from another broker.
“The IRDA has tried to ensure that brokers cannot compete with each other. Also, going forward, as the market matures the broker can review the claim limit of Rs 1 crore,” Mr Laddha added.
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