Purchaser of a brand new automobile could should pay value of car and insurance coverage premium by separate cheques, if the suggestions of a committee to evaluate MISP pointers are accepted by the insurance coverage regulator Irdai. The Insurance coverage Regulatory and Improvement Authority of India (Irdai) had issued MISP pointers in 2017 with the intention of streamlining the method and bringing the practices of car insurance coverage, being bought by automotive sellers beneath the provisions of the Insurance coverage Act, 1938.

Motor Insurance coverage Service Supplier (MISP) refers to an car supplier appointed by the insurer or the insurance coverage middleman to distribute and/ or service motor insurance coverage insurance policies of automotive automobiles bought by it. In June 2019, the regulator had arrange a committee to evaluate the MISP pointers. The panel has submitted report by which it has made numerous suggestions for orderly conduct of motor insurance coverage enterprise by MISP channel.

Amongst different points, the panel examined the present follow of accumulating the premium fee from the client whereas soliciting the motor insurance coverage coverage. Beneath the current system, it mentioned there’s a lack of transparency in the price of insurance coverage premium when the client buys the automobile for the primary time by the automotive supplier and makes the fee by one single cheque.

Because the MISP makes fee to the insurance coverage firm from his personal account, “the client doesn’t know the insurance coverage premium being paid as it’s subsumed in the price of the automobile”, the committee mentioned. It advised that this lack of transparency will not be within the curiosity of the policyholders’ nterest because the true value of insurance coverage will not be identified to the client. “The client will not be conscious of the protection choices and reductions accessible within the course of. The client additionally can’t negotiate with the MISP to get the most effective protection on the optimum value.”

The committee beneficial that the client ought to make fee to the insurance coverage firm immediately 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 by 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 mentioned that given the potential alternative for motor insurance coverage enterprise by the MISPs, there’s a have to develop and strengthen regulatory framework and supervision actions for this distribution channel.

The panel has additionally made suggestions on the unique gear producers (OEMs). It famous that OEMs wield large affect over the automotive sellers.

“The OEMs must be introduced into the regulatory ambit. Subsequently, the definition of MISP must also embody OEM,” the panel mentioned. The panel additionally advised that an MISP ought to mandatorily open up to the client the remuneration and reward that it will get from the insurance coverage firm or the insurance coverage middleman.

In case of cashless settlement, it mentioned 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.

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