The department of financial services has proposed that an insurer may also distribute other financial products as specified by and subject to the regulations. With the finance ministry proposing to allow insurance companies to distribute other financial products, the industry has sought more clarity on it. The details of the government’s move aimed at enabling newer channels of distribution are still awaited.
Insurers seek clarity on other financial products, “We are seeking more details about it. We are not aware of what that particular section means. We are still to understand what that other financial products distribution mean,” a senior executive of a major insurance company told FED, on the condition of anonymity.
The department of financial services has proposed that an insurer may also distribute other financial products as specified by and subject to the regulations.
Notably, according to the proposed amendments, an insurer may also provide services related or incidental to the insurance business. Insurance industry insiders said by introducing this new provision, companies may be allowed to provide “value-added services” to their customers.
The department of financial services said given the changing needs of the insurance sector, a comprehensive review of the legislative framework governing the sector has been done in consultation with insurance regulator Irdai and the industry. Several suggestions have been received to enhance insurance penetration, improve efficiency, and enable product innovation and diversification.
The proposed amendments primarily focus on enhancing the financial security of the policyholders, promoting policyholders’ interests, improving returns to the policyholders, facilitating the entry of more players in the insurance market leading to economic growth and employment generation, enhancing efficiencies of the insurance industry -operational as well as financial and enabling ease of doing business.
The proposal includes various measures such as opening up registration to various classes, sub-classes and types of insurers with appropriate minimum capital requirements as specified by Irdai, allowing services to insurers that are incidental or related to the insurance business as well as distribution of other financial products as specified by Irdai, enabling newer channels of distribution, providing for efficient use of capital and resources, etc.
The ministry has invited comments and suggestions on proposed amendments to the Insurance Act, 1938 and Insurance Regulatory and Development Authority Act, 1999 by December 15, 2022.
