INDIA Law and Practice Contributed by: Neeraj Tuli, Celia Jenkins and Rajat Taimni, Tuli & Co
Point-of-Sales Persons The IRDAI has issued guidance on the appointment of a point-of-sale person (POSP) for the solicitation and servicing of point-of-sale products on behalf of life, general, and health insurers. A POSP may be appointed by either an insurer or an insurance inter- mediary. The entity engaging the POSP is required to train the POSP and conduct an in-house examination of such POSP in accordance with the norms issued by the IRDAI. Motor Insurance Service Providers The IRDAI issued Guidelines on Motor Insurance Ser- vice Providers 2017 (the “MISP Guidelines”) to regu- late the role of automobile dealers in the distribution and servicing of motor insurance products. A duly registered motor insurance service provider (MISP) is permitted to solicit, procure and service motor insur- ance policies for insurers or insurance intermediaries (as the case may be) in accordance with the provisions of the MISP Guidelines. 6. Making an Insurance Contract 6.1 Obligations of the Insured and Insurer All insurance policies in India contain insuring clauses, general conditions, exclusions and definition sections. The insuring clause, exclusion, and definition word- ing depend on the type of policy being issued and the type of cover requested, although the conditions are fairly standard and will include notification, co- operation, consent, changes in material risk, and other insurance clauses. These clauses can be deleted or modified by way of endorsements. Insurance contract wording is highly regulated in India. The Tariff Advisory Committee (TAC)—a statuto- ry body established under the Insurance Act—issued standard policy terms and conditions for fire, marine (hull), motor, engineering, industrial risks, and workers’ compensation insurance. These standardised terms cannot be altered by insurers, and most businesses are still required to follow them. However, the tariff general regulations, terms, conditions, clauses, war- ranties, policy, add-ons, endorsement wording, and proposal form applicable to specific coverage under fire and allied perils insurance business, governed
other than insurance distribution, it is not permitted to make the sale of its products contingent on the sale of an insurance product (or vice versa). Corporate agents are allowed to have arrangements with a maximum of nine insurers in each class of insurance business. Insurance Brokers Insurance brokers are required to exclusively carry out the distribution of insurance products. Any company, limited liability partnership or co-operative society may apply to the IRDAI for the grant of an insurance broker certificate of registration. Applicants can reg- ister as direct brokers, reinsurance brokers, or com- posite brokers (involved in both direct and reinsurance broking). The minimum capital is INR7.5 million for direct brokers, INR40 million for reinsurance brokers and INR50 million for composite brokers. All insur- ance brokers are required to be part of the Insurance Entities that are licensed as insurance marketing firms are permitted to distribute insurance products along with mutual funds, pension products and certain other financial products, provided that permissions are in place to distribute those financial products from the respective regulator. Insurance marketing firms are required to have a minimum net worth of INR1 million. They are also permitted to undertake survey functions through licensed surveyors employed on their rolls, as well as policy servicing activities and other activi- ties permitted to be outsourced by insurers under the applicable regulatory framework. Insurance marketing firms are allowed to have tie-ups with a maximum of six insurers in each class of insurance business. Web Aggregators Brokers Association of India. Insurance Marketing Firms An entity, such as a company or a limited liability partnership, that is registered as a web aggregator is permitted to display on its website information on insurance products of those insurers with whom the web aggregator has entered into an agreement. The web aggregator is also permitted to display product comparisons on its website, carry out activities for lead generation, and share leads with insurers. A web aggregator must have a minimum capital of INR2.5 million.
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