Respected Shri T.S. Vijyan, Chairman, Members and Senior Officials of IRDA,
CMD's and CEO's of Insurance Co's who have sponsored this Summit and other Executives of Public and Private Sector Insurance Companies,
Representatives from Press and Media,
All Broker Members and their delegates, Ladies and Gentlemen,
Good morning and a very hearty welcome to all of you on behalf of IBAI and its Board of Directors, to the 10th Brokers Summit on the Theme - "Brokers-Dedicated to Growth & Penetration of Insurance", in this famous city, Hyderabad
IBAI is now 11 years young and is the only IRDA recognized Association with all the licensed Brokers are required to be members of the Association. Today, Licensed Brokers are 315, and all are members of IBAI. There are 276 Direct Brokers, 33 Composite Brokers and 6 Reinsurance Brokers. We understand that a good number of applications are pending with IRDA for renewal and also for issue new licenses.
Friends, This year's Summit will focus on important role of Broker in shaping up the future course of development of Indian Insurance Market. Increasing insurance penetration and achieving higher growth level through dedication, in partnership with customers and insurers which is our objective. The Broker summit is also an endeavor to bring together our Broker members and representatives of Insurers and Clients to engage Brokers to become more professional in offering value added services both to the Clients and Insurers.
Insurance Industry in India is under transformation and is expected grow much faster than before for a variety of reasons such as growth of the financial sector as a whole in general and various services segments in particular. This is especially the case in view of the new thrust of Government on financial inclusion. Insurance would now be taken to the masses as in the case of Banking and other related segments of financial services. IRDA has in the recent past has taken a number of initiatives through e-education and enhanced media coverage for wider dissemination of information on developments in the insurance sector the industry participants have also been undertaking innovative measures to reach out to the masses.
General Insurance Industry has grown at close to 20% over last 5 years and reached an annual premium of Rs. 70,000 Crore in the fiscal year 2013. Retail lines have seen strong growth in the recent past as customers are becoming increasingly aware of the benefits general insurance. There is therefore huge scope to increase Insurance penetration particularly general Insurance from present level of 0.75% to 1.5% in shortest possible time. Similarly, Life Insurance Companies have also embarked upon a very ambitious plan for ensuring at least one life policy for every insurable life. Hence it will be very interesting as the market is going to evolve at a very fast pace.
Friends, we have thoughtfully selected this year's Summit theme "Brokers-Dedicated to Growth & Penetration of Insurance" keeping in mind the Vision plan and the road map being charted out by both Life Insurance and General Insurance Companies, for keeping pace with the development and increasing the penetration of Insurance in the country. Surely therefore, Insurance Brokers have a vital role in the development of Insurance Industry through their dedication and professional skills in steering the Insurance Industry to greater heights. During the course of the programme you will find interesting topics being discussed by eminent speakers and panelists, revolving around the Summit Theme. The focus would be on the opportunities for the Insurance Brokers to reinforce their role as dedicated partners in achieving higher growth and penetration of insurance in the country.
Friends, IBAI is greatly honored to have Shri T.S. Vijayan, Chairman, IRDA with us today to inaugurate IBAI 10th Brokers Summit and also deliver his key note address. We are pleased to have our amidst Shri M. Ramaprasad, Shri D.D, Singh, (Members) and IRDA Officials. We are also indeed very happy that many Broker members, CMDs, CEOs of Insurance Companies, Customers representatives and other stake holders have spared their valuable time to join us for this important once a year event.
Friends, during the year we had met the IRDA Chairman Shri T.S. Vijayan, and also other IRDA Officials on more than one Occasions to appraise the need to addressing several issues for streamlining and making the functioning of Broking Intermediaries more effective.
To begin with some of the demands which received IRDA"s favorable consideration:
- Brokerage on Terrorism Premium: IBAI's longstanding submission for 10% brokerage was partly met by IRDA issuing direction to Terrorism Pool Manager, GIC Re, for allowing 5% Brokerage. However, GIC Re, the Pool Manager in their communication to Insurance Companies conveyed that brokerage up to 5% may be loaded to the existing Terrorism premium rates and charged to the Insured, despite direction from IRDA to the contrary.
On immediately taking up the matter with IRDA, by IBAI President, GIC Re was asked by IRDA to reissue the circular allowing brokerage up to 5% without any loading in Terrorism premium charged to the Insured with immediate effect. We wish to give credit in some measure to IRDA for this and also thank General Insurance Council and Terrorism Pool Managers GIC Re, for their positive attitude always towards Broking Community.
- Business from Single Client: Increase in limit of business from single client from 30% to 50% and
- Annual Fee: Reduction in the annual fees from 0.5% of annual brokerage to 0.25% although maximum limit remaining same as before without much benefit major section of brokers.
- Sub-broking: The Committee appointed by IRDA, in which IBAI President and two other directors were members had submitted its recommendations and we believe that the issue is under active consideration of the Authority. Sir, we are eagerly hoping to hear something favourable and encouraging on this today from you.
Sir, we are however, greatly disappointed that some of the assurances made to us such as Reimbursement of 2.5% of premium for administrative efficiency for General Insurance business, additional bonus of 5% of the first year premium earned for Life Insurance business and Networking arrangements for foreign tie-ups etc. have not found place in the new broking regulations.
Now, some of the latest heartbreaks for Broking Community are the following:
Renewal of Licenses of Broker Members
IRDA's circular of October 11, 2013 directing the Insurers not to accept any business from the insurance broker not holding a valid license as on that day and the 'letter of processing 'issued by the Authority should not be treated as an approval for acceptance of New Business has come as a shock to the broking community. We believe that if the applicant does not suffer from disqualifications and submits the application within the time limit and on tendering fees the license shall be renewed on time. Our understanding is that the regulations do not allow deferment of the renewal date if the renewal application does not suffer from any disqualification and has complied with the time limits specified. The directions in the IRDA circular amount to suspension of license pending renewal, which will seriously imperil and penalize the broker member. The fall out of this would be the broker whose license is pending renewal is bound to lose his business. The business will be either captured by some other brokers or Insurance Company will be too happy to book the business directly. The business once lost, broker will never be able to capture the same again. While we whole heartedly appreciate and welcome Chairman's direction that no license should be delayed or undecided before the renewal date, we are afraid that till this status is achieved the broker members whose licenses are presently pending renewal should be given due consideration and not be made to suffer.
Exposure draft on Insurance Clearing House.
We find that some of the provisions contained in the exposure draft on Insurance Clearing House (ICH) are very difficult needing close examination of some of the specific provisions, looking into nature of reinsurance business. In some of the developed Markets, regulators allow brokers to do the business freely without any interference / interaction. Most of the Regulators basically supervise and monitor the movement of settlement of balances and allow commercial transactions in both treaty and facultative business transactions freely without interfering in the day to day operations of Brokers. Insurance Brokers like in any other business houses have to take decisions on commercial basis. Our experience in dealing with multiple countries, multiple insurance companies multiple cultures is that the task is very challenging to meet the understanding and every broker we believe makes very special efforts as far as reconciliation of balances are concerned, because in our business, we conclude the treaty business today, get the statement of account after 4 months and premiums after 9 months and claims after 2 years. This process has been going on from generations in servicing of the clients.
1RDA has prescribed unique ID number to each Reinsurance brokers and also foreign brokers willing to accept / place business dealings have to register here. There is Professional Indemnity for Brokers and the most painful thing of all is recent Service Tax which we cannot recover from foreign Reinsurance Companies and with these cost loadings Indian Brokers do not get a fair deal.
We wish that IRDA deliberates on ICH and would facilitate creating a business environment convenient both for domestic and overseas market players so that overseas players would look up to Indian market and in reciprocity Indian Brokers are allowed to operate in those markets.
Also, there are some recent proposals like considering increase in FDI limit up to 100% in case of Broking and multiple agency concept through Insurance Distribution Company, which are detrimental to the Broking Community and IBA1 strongly oppose these developments.
Chairman Sir, we look forward to you for resolving these issues favourably for the Broking Community.
Friends, let me also list some issues we have with our Insurance Companies.
1. Delayed payment of brokerage,
2. Delayed issuance of Form 16A Certificate.
3. Direct booking business at renewals which was placed by brokers.
4. Arbitrary and mid-term reduction in brokerage in different class of insurance
5. Delay in issuance of documentation
6. Delayed settlement of claims etc.
We request CMD's & CEO's Insurance Companies and the General Insurance Council to kindly address these so that hardships of Brokers are minimized.
Service Tax matter:
A lot of hardships are being faced by Insurance Brokers particularly Reinsurance and Composite Insurance Broker Members arising out of applicability of service tax on brokerage income.
IBAI delegation held discussions with Dr. Parthasarathy Shome and his team four times during the year on different occasions in Delhi with regard to Service tax liability on brokerage paid by foreign reinsurers to Indian Reinsurance and Composite Insurance Brokers for placement of reinsurance business with them. We were able to convenience them that service tax was paid on composite amount including reinsurance premium and brokerage paid to the broker as well as separately charged on the brokerage, which resulted in double taxation.
Govt. Dept is now seeking inputs from Insurance Industry to ascertain whether there is double taxation of brokerage paid to the brokers. It is expected that necessary circular will be issued by competent Authority for mitigation of double taxation if any, soon. This is some good news we wish to share with our members.
I would like to thank all of you for giving me a patient hearing and wish the deliberations during this Summit would help the Broker members to play an important role in offering value based services to the clients and dedicating to growth and penetration of business.
We have chosen eminent speakers from Insurance Industry and all will benefit from their rich experience and their plans for contributing to the healthy growth of the Insurance Industry.
I thank you all for being with us today and my special thanks to all the sponsors of today's event.
I also take this opportunity to thank all my colleagues on the Board of IBAI for their unstinted support during the year. My special thanks go to fellow Director from Hyderabad Shri. K.V. Satyanarayana, Shri Nitin G. Dossa, Hon. Secretary & Director and also IBAI Secretariat Officials for making all the arrangements for this Summit.
I am aware that you all are eagerly waiting for Shri Vijayan, Chairman, IRDA to address the house. I would now request him to deliver his key note address and inaugurate today's Summit.
Thank you! Sohanlal Kadel PRESIDENT
Brokers- Dedicated to Growth & Penetration of Insurance
10th Brokers Summit by IBAI
Hyderabad, 7th February, 2014: Insurance Brokers Association of India (IBAI) held its 10th Brokers Summit with the theme "Brokers- Dedicated to Growth & Penetration of Insurance" at Taj Deccan, Banjara Hills, Hyderabad, on February 07, 2014.The summit was inaugurated by Shri T.S. Vijyan, Chairman IRDA. CMD's of all PSU Insurance Companies both Life and Non-Life and CEO's of all Private Insurance Companies participated in the Summit. Over 250 delegates from Broker Member Organizations, Insurance Companies, Customers and other stakeholders from Insurance Industry were present. Over the years the summits have been held in the major metro cities.
According to Mr. Sohanlal Kadel, President, IBAI; "This Summit focused on the important role of Broker in shaping up the future course of development of Indian Insurance Market. Increasing insurance penetration and achieving higher growth level in partnership with customers and insurers is prime objective. Eminent speakers and panelists focused on the opportunities for the Insurance Brokers to reinforce their role as valued partners in growth of the Insurance Industry.
The theme "Brokers- Dedicated to Growth & Penetration of Insurance" has been kept keeping in mind the Vision plan and the road map being charted out by both Life Insurance and General Insurance Companies, for keeping pace with the development and increasing the growth & penetration of Insurance in next decade, in the country
There was interesting round table discussions regarding Industry perspective on Growth & penetration of business by Guest of Honours Shri G Srinivasan, CMD, New India Assurance Co Ltd, Shri N S R Chandra Prasad, CMD, National Insurance Co. Ltd, Shri A.K. Roy CMD, GIC Re, and Shri M Kharat, CMD, United India Insurance Co Ltd. and Shri M. Rama Prasad, Member, IRDA, chairing the Session.
Panel discussions on topics such as "Sub-Broking for reaching customers in Semi Urban and Rurak areas" and Distributing through Brokers — The key to greater insurance penetration" saw active participation & interaction between the speakers, panelist & those attending the summit.
As on date there are 315 licensed brokers of whom there are about 276 Direct Brokers, 33 Composite Brokers and 6 Reinsurance Brokers. Brokers handle around 24% of business in non-life segment and about 0.5% in the life insurance segment. Their wide array of services range from risk analysis, to placement of business at best price with optimum coverage, rendering service during currency of the insurance contract and assist in the handling of claims amongst many other services.
About I.B.A.I
Incorporated as a Company under Section 25 of the Companies Act, 1956 vide Certificate of Incorporation No. U 67120 MH 2001 NPL 132860 dated 25th July, 2001; IBAI has a Memorandum of Association as well as an Articles of Association, as required under the Companies Act, 1956 & is run by a Board of Directors who are elected by the members.
IBAI's main objectives are to promote interaction among the Insurance/Reinsurance Broker members and to encourage, promote, facilitate and protect the interests of the members of IBAI and to provide an avenue to the members for further education, training and research in all fields of insurance and reinsurance and represent the interests of Brokers with other organizations.
IBAI is a member of Indian Merchants Chambers, Mumbai, Bombay Chamber Of Commerce and Industry, Mumbai, Confederation of Indian Industry and Federation of Indian Chambers of Commerce and Industry. It is the only Insurance Regulatory and Development Authority (I.R.D.A.) recognized apex body of licensed Insurance Brokers. As per Insurance Brokers' Regulations 2002 framed by the I.R.D.A., all licensed Brokers are required to be member of I.B.A.I.
As on date, Direct Insurance Brokers, Composite Insurance Brokers and Reinsurance Brokers (totaling to 315 licensed insurance brokers) are members of I.B.A.I. Only those insurance brokers who are licensed by the I.R.D.A. are considered for admission into the membership of I.B.A.I.
