Insurance Brokers, India & Global Scenario

Insurance brokers are seen as intermediaries who ensure that both the parties to a contract obtain what they require and a third party who ensures that both the parties to the contract jointly benefit.

 

Insurance brokers in India, are granted license by Insurance Regulatory & Development Authority (IRDA), Insurance regulator in India formed by IRDA Act 1999, In exercise of powers confered by sub-section (1) of section 42D of insurance Act 1938.

 

Insurance Brokers representive of the client's interest in the insurance contract and not the insurer, an agent or bank is seen as the representative of the insurer. Though there are many insurance brokers, in India, insurance brokers are very often misunderstood as a glorified insurance agent or they choose operate like one.

 

Global insurance broker has a wider set of duties, in countries where the insurance industry is more matured and developed. Starting with risk analysis/audit, recommending Risk Management Program and then suggesting risk mitigation products if available with insurer or otherwise design the product, set rates, process and actual settlement of the claims. In many, countries the insurance broker is far larger than the insurance companies which predominantly limit itself as an underwriter.

 

IRDA opened Indian market to Insurance brokers in 2003 and slowly Insurance brokers in India are taking baby step towards becoming at par with global insurance brokers. Of late IRDA has started permitting insurance brokers in India to give consultation to settle claims up to Rs 1 crore against a fee. As the process of getting the insurance broker license in India is very tough, many times more tough than many foreign countries, we believe that IRDA is laying foundation to a strong insurance brokerage industry and going forward would allow lot of additional role to the insurance broker in India, which would be beneficial to the clients.