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IRDAI New Guidelines for Car Dealers Selling Insurance

As per the new guidelines issued by the Insurance Regulatory Development Authority of India (IRDAI), the automobile dealers who distribute car insurance will have to surrender their existing license and become MISPs to be eligible to sell insurance to customers. The new guidelines are expected to come into force from Nov 1, 2017.

What is an MISP?

Dealers who are currently distributing insurance will be referred to as Motor Insurance Service Providers (MISP) as soon as they get licensed under the new guidelines of IRDAI. MISPs will also be granted a Unique Identification Number (UIN) that will be linked with their Aadhaar Card number.

Why This Initiative?

The objective of this initiative is to oversee the activities of dealers that are sell motor insurance, which will, in turn, ensure security in the transaction process and guarantee customer-oriented services.

How Is the Initiative Going to Be Implemented?

Post the acquirement of the new license, MISPs will not be able to show favouritism towards policyholders who have got their insurance from them. Also, earlier MISPs had a tie-up with 2 – 3 insurers, but now they are required to have as many as 23 tie-ups. This will ensure that they offer a choice from a wide range of insurers whereby the customer can select the insurer as per his/her requirement. Hence, the consent of the customer has been received before selling the insurance of a particular insurer, which wasn't the case earlier.

Having said that, the existing automotive dealers will stand ineligible to distribute insurance. They are required to first surrender their existing license and become an MISP in order to be eligible to sell motor insurance. A set of rules has also been issued in connection with the appointment and training of the MISP by the insurer. These rules will also aid the insurers during renewal procedure of the license of MISPs. Not just that, the MISPs can also aid the policyholders in handling their claim documentation and servicing. However, they are strictly barred from interfering both in the appointment and assessment activities of the loss surveyors. Neither are they permitted to make personal profits of any sort by influencing claims.

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(Source and Credits: TEAM-BHP)

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