IRDA threatens insurers about rebate
By Venkatachari Jagannathan | 08 Mar 2002
Chennai:
Our
laws specifically prohibit rebating of insurance premium to
procure business. Nevertheless, it is the first rule that is
broken by insurers and their agents to gather business. So the
Insurance Regulatory and Development Authority (IRDA) has now
warned insurers that it will cancel their business licences if
their agents continue to rebate.
Rebating
of insurance premium is as old as the insurance business. In India
it used to be the agents of Life Insurance Corporation of India
who used to pay some premium instalments on behalf of their
clients - they did this out of their own earnings.
Rebating
of insurance premium is as old as the insurance business. In India
it used to be the agents of Life Insurance Corporation of India
who used to pay some premium instalments on behalf of their
clients - they did this out of their own earnings.
Nonetheless,
after the opening up of the sector and with many new private
players getting into the arena, rebating has become rampant. In
a free market one cannot rule out insurers funding agents to
rebate. And complaints against this practice are pouring into IRDAs
office.
In
a communication to all insurers, IRDA chairman N Rangachary has
asked them to take such actions to put an end to this practice.
IRDA will itself conduct surprise checks on insurers and agents
in this regard and will severely deal with those who rebate
insurance premium.