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Insurance sector regulator IRDA has proposed to make it mandatory for insurers, who have been in business for 10 years, to open at least 25 per cent of new offices in areas that have a population less than 1,00,000.
“An insurer that has completed 10 years of business is proposed to be mandated to open at least 25 per cent of new places of business in places where population is not more than 1,00,000,” IRDA has proposed in its Draft Exposure on Insurance Regulatory and Development Authority (Places of Business) Regulations, 2012.
The proposed regulations have been made to help increase the penetration of the sector in rural and semi-urban areas, IRDA said.
The existing regulatory approach of requiring insurers to follow certain requirements while opening/closing/relocating various places of business deserve to be strengthened.
IRDA said an insurer having solvency ratio of 1.5 and expenses of management within the extant limits in the preceding three financial years are proposed to be permitted to open new places of business, in places where population is not more than 1,00,000, 15 days after submitting the information on the same.
“The proposed limit of 1,00,000 on population is, to encourage the opening of places of business in Tier 2 and below towns/villages,” it said.
It added that in respect of all other places of business, the insurers will be accorded approvals on an aggregate basis once in a financial year, based on their expansion plans.
However, insurers are allowed to approach IRDA for any urgent business proposals for opening any other places of business, it added.
The Draft Exposure also proposes to mandate insurers to offer minimum policyholders’ services such as collection of premiums/proposal deposits and status confirmation of policy service requests in all the places of business.
It has also been proposed in the draft regulations “that the objective of opening a new place of business shall be for long run, shall not be for short term durations”.
Further, IRDA said closure/relocation of the places of business by insurers should be after due consideration of all the factors including possible inconvenience to its policyholders.
“A minimum of 2 months advance notice on the proposed relocation/closure should be notified to policyholders serviced by that place of business along with information on alternate arrangements being made to provide services to them.
It said the details of relocation as well as closure of place of business shall be reported to IRDA soon after any such move.
Irda has invited comments on its draft regulations by various stakeholders.
“An insurer that has completed 10 years of business is proposed to be mandated to open at least 25 per cent of new places of business in places where population is not more than 1,00,000,” IRDA has proposed in its Draft Exposure on Insurance Regulatory and Development Authority (Places of Business) Regulations, 2012.
The proposed regulations have been made to help increase the penetration of the sector in rural and semi-urban areas, IRDA said.
The existing regulatory approach of requiring insurers to follow certain requirements while opening/closing/relocating various places of business deserve to be strengthened.
IRDA said an insurer having solvency ratio of 1.5 and expenses of management within the extant limits in the preceding three financial years are proposed to be permitted to open new places of business, in places where population is not more than 1,00,000, 15 days after submitting the information on the same.
“The proposed limit of 1,00,000 on population is, to encourage the opening of places of business in Tier 2 and below towns/villages,” it said.
It added that in respect of all other places of business, the insurers will be accorded approvals on an aggregate basis once in a financial year, based on their expansion plans.
However, insurers are allowed to approach IRDA for any urgent business proposals for opening any other places of business, it added.
The Draft Exposure also proposes to mandate insurers to offer minimum policyholders’ services such as collection of premiums/proposal deposits and status confirmation of policy service requests in all the places of business.
It has also been proposed in the draft regulations “that the objective of opening a new place of business shall be for long run, shall not be for short term durations”.
Further, IRDA said closure/relocation of the places of business by insurers should be after due consideration of all the factors including possible inconvenience to its policyholders.
“A minimum of 2 months advance notice on the proposed relocation/closure should be notified to policyholders serviced by that place of business along with information on alternate arrangements being made to provide services to them.
It said the details of relocation as well as closure of place of business shall be reported to IRDA soon after any such move.
Irda has invited comments on its draft regulations by various stakeholders.
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