Auto Dealers will Need a Licence to Sell Motor Policies: IRDAI

Automobile dealers would need to licence themselves as Motor Insurance Service Providers (MISP) with the insurance regulator, a new guideline by Insurance Regulatory and Development Authority of India (IRDAI) said.

The MISP would be responsible for distribution and servicing of motor insurance policies. The distribution fees range from 19.5% of the own damage portion of the premium to 22.5% depending on the type of vehicle.

Sharad Mathur, Head of Sales and Distribution at SBI General Insurance, said that the regulator has made the process simpler by making it a process of enrollment wherein an insurer can appoint an auto dealer rather than having a stringent training procedure for other intermediaries. "This makes the entire arrangement official and is a welcome change," he added.

Under this arrangement, IRDAI has said that MISP can sell and service only motor insurance and add-ons for the vehicles being sold through their showrooms. They will also have to facilitate the creation of an e-insurance account for the policyholder.

Till now, auto dealers were freely selling motor policies to customers. However, there have been discrepencies with respect to the number of insurance options given to customers as well as the premiums being collected. With these norms that will be applicable from November 1, all these activities will come under the purview of IRDAI.