The Insurance coverage Regulatory and Growth Authority of India (Irdai) had issued MISP tips in 2017 with the intention of streamlining the method and bringing the practices of car insurance coverage, being bought by automotive sellers below the provisions of the Insurance coverage Act, 1938.

Motor Insurance coverage Service Supplier (MISP) refers to an vehicle supplier appointed by the insurer or the insurance coverage middleman to distribute and/ or service motor insurance coverage insurance policies of automotive autos bought via it.

In June 2019, the regulator had arrange a committee to assessment the MISP tips. The panel has submitted report during which it has made varied suggestions for orderly conduct of motor insurance coverage enterprise via MISP channel.

Amongst different points, the panel examined the present follow of gathering the premium cost from the shopper whereas soliciting the motor insurance coverage coverage.

Beneath the current system, it stated there’s a lack of transparency in the price of insurance coverage premium when the shopper buys the car for the primary time via the automotive supplier and makes the cost via one single cheque.

Because the MISP makes cost to the insurance coverage firm from his personal account, “the shopper doesn’t know the insurance coverage premium being paid as it’s subsumed in the price of the car”, the committee stated.

It steered that this lack of transparency isn’t within the curiosity of the policyholders’ nterest because the true price of insurance coverage isn’t recognized to the shopper. “The client will not be conscious of the protection choices and reductions obtainable within the course of. The client additionally can not negotiate with the MISP to get the perfect protection on the optimum value.”

The committee advisable that the shopper ought to make cost to the insurance coverage firm instantly which is facilitated by the MISP.

“MISP shall not gather the insurance coverage premium quantity in its personal account after which switch the identical to the insurance coverage firm,” it added.

In line with the report, the motor insurance coverage enterprise sourced by MISPs via brokers and insurers put collectively constitutes round 25 per cent of the entire motor insurance coverage enterprise or round 11.25 per cent of the general basic insurance coverage enterprise.

In its report, the committee stated that given the potential alternative for motor insurance coverage enterprise via the MISPs, there’s a must develop and strengthen regulatory framework and supervision actions for this distribution channel.

The panel has additionally made suggestions on the unique tools producers (OEMs).

It famous that OEMs wield super affect over the automotive sellers.

“The OEMs ought to be introduced into the regulatory ambit. Subsequently, the definition of MISP must also embody OEM,” the panel stated.

The panel additionally steered that an MISP ought to mandatorily speak in confidence to the shopper the remuneration and reward that it will get from the insurance coverage firm or the insurance coverage middleman.

In case of cashless settlement, it stated the MISP ought to essentially segregate the 2 features of gross sales and servicing of motor insurance coverage insurance policies and guarantee that there’s full arms-length relationship between the 2. PTI NKD CS HRS hrs