IRDA panel for sub-brokers in insurance to push rural sales

An IRDA appointed panel favoured the appointment of sub-brokers for selling insurance products so as to increase penetration in the rural and semi-urban markets.

“Committee is of the opinion that it is the right time to introduce the sub broking system in India. This will enable the concept of broking to percolate down to smaller towns which will ultimately help the rural poor,” final report on insurance sub broking said.

“The committee recommends allowing sub brokers to sell all the insurance products except reinsurance business,” it said.

The report also noted that the aim of sub-broking is customer-centric giving the customer the opportunity to choose products from multiple insurers while augmenting insurance penetration.

Drawing a parallel from the agency channel of distribution, it said, a sub-broker is an agent of the broker. Besides, the 10-member committee also consider the qualification, examination and syllabus for players in the retail broking system.

The committee recommends inclusions of all the important topics needed to discharge the duties of a sub broker are included in the syllabus. It is suggested that a sub broker should also receive 20 hours of practical training from the main broker in addition to the mandatory training of 50 hours, it said.

If the sub broker places premium of more than Rs 10 crore for two financial years he has to upgrade his status as broker and cannot continue as sub broker, the committee, headed by P C James chair professor of National Insurance Academy said.

The sub broker can place business worth Rs one lakh per policy. This thresh hold limit applies for both Life and Non-Life business, it said.

Brokers having a certain degree of consistency and scale of revenues, geographical presence and IRDA licensed broking workforce can appoint sub brokers, it added.

The panel suggested that the available infrastructure of Common Service Centers (CSC) in the rural areas may be utilised for procuring insurance business through sub broking model.

It noted that in order to increase the penetration of insurance in semi-urban and rural areas presence of intermediaries is vital. At present the insurers and brokers are mainly operating mostly in big cities.

http://www.business-standard.com/article/pf/irda-panel-for-sub-brokers-in-insurance-to-push-rural-sales-113022100774_1.html