Insurance intermediaries such as brokers, corporate agents, insurance website aggregators and marketing companies, which engage in the solicitation and distribution of products, are now required to underwrite policies professional liability insurance.
The Insurance Regulatory and Development Authority of India (Irdai) on June 11 issued guidelines on standard professional indemnity policy for insurance intermediaries. The purpose of these guidelines is to specify the professional liability policy that meets regulatory requirements. These guidelines will come into effect on July 1.
Irdai said the premiums, rates and other terms and conditions of these coverages can be decided by insurance companies according to internal underwriting guidelines. In addition, all policies – fresh and renewed – issued under the specified professional insurance will have to meet regulatory requirements.
Insurers will have to issue an annual policy to the insurance intermediary.
“The policies issued will cover all damages resulting from any claims for breach of duty by the insured, fraud and dishonesty by any employee that the insured becomes legally bound to pay due to claims made for the first time in writing against the insured during the period of the policy, including costs and expenses incurred with the prior consent of the insurers, always subject to the limits of compensation and other terms, conditions and exceptions of the policy. The ratio of the compensation limit for a given accident to a year will not exceed 1: 1, “according to the guidelines.
The premium rates will be determined by the insurers based on various risk factors and the underwriting policy approved by the board of directors. Turnover / expense figures, if any, will be accurately assessed and reported by the applicant at the start of the policy.
Since all insurance intermediaries for door-to-door sales and distribution must take out a professional civil liability insurance policy and the retroactive date is also from the date of granting of a registration certificate by the ‘Irdai, penal provisions will become applicable in the event that the potential insured has not purchased / paused in continuity of policies, in accordance with the guidelines of Irdai.
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