IRDA issues guidelines for car dealers selling insurance

The Insurance Regulatory and Development Authority (IRDA) has issued new guidelines for automobile dealers who sell car insurance on behalf of insurance companies. The aim is to have regulatory oversight over automotive dealers involved in distributing and servicing motor insurance policies. 

According to IRDA, 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 will be known as a Motor Insurance Service Provider (MISP). The existing automotive dealers who hold intermediary license/certificate of registration won't be allowed to distribute and service motor insurance policies. They will have to surrender the existing license and necessarily become MISPs in order to distribute and service motor insurance policies.

IRDA has formulated a set of guidelines for MISPs with respect to their appointment by insurer or insurance intermediary, training, renewal of permission and review of operations. IRDA has laid out a specific code of conduct for MISPs as well. According to the set code of conduct, the MISPs will have to offer a choice of motor insurance policies of different insurers and inform the prospect of the premium rates of different insurers. The MISP will have to obtain consent of the customer while issuing the policy and provide a copy in electronic form. They cannot deny the prospect to seek for insurance policy from any insurer or insurance intermediary.

MISPs won't be interfering in the appointment and assessment activities of surveyors and loss assessors. They also aren't allowed to directly or indirectly influence the claims to inflate their own revenue. Also, in cases where the MISP offers a cashless service, they shall not discriminate between policyholders who have bought insurance policies from them. 

Further, the insurer will have to intimate the policy holder directly regarding the initial estimate of the loss and the final amount for which the claim was settled. The new guidelines will come into force from November 1, 2017. To read more about the IRDA guidelines, click here.