Indian insurance brokers' fate in limbo as PSUs tweak selection norms
New Delhi: The 'strategies' of multinational broking houses for their expansion in the insurance broking business in India are costing dearly to the domestic broking firms.
As per the industry insiders, it has come to the notice that most of the government-owned public sector enterprises have rolled out a red carpet for the multinational players by tweaking 'norms' for selecting insurance brokers.
As per industry sources, multinational players are being given extra 'preferences' in the selection process as the PSUs or government departments bring out tailored-made "expression of interest" documents for them that weed out 'capable' Indian insurance broking firms from participating in the competition for the selection of broker.
"They (big firms) indulge in alleged unethical practices by sharing a large part of their brokerage income with officials concerned against the IRDA regulations and in return, the officials change the eligibility criteria in the EoI to suit multinational companies and eliminate Indian brokers from the competition," the sources said, adding that the case of a recent notification of a Bangalore-based PSU under the Defence Ministry is a glaring example of how manipulations are engineered in this sector.
As per international practice, insurance broking companies in India act as intermediaries between insurance companies and industries. They don't get any remuneration from the industry, but they get broking fees from insurance companies as per IRDA norms. As of now, the value of the insurance business done through broking firms in India is more than Rs 40,000 crore.
Commenting on the prevailing situation, a domestic insurance broker said, "After the government allowed liberal foreign participation in the insurance broking system, a few multinational insurance brokers have set shops in India and are capturing the entire insurance market through various methods, including unethical practices. If it continues, the whole Indian insurance broking companies would be gradually pushed out of this sector."
"Indian insurance broking companies with no foreign holding must be given priority at least in PSU and government sector. If not done, the entire insurance sector would go into the hands of some multinational insurance broking companies," he said, adding that the PSU sector should encourage Indian houses with no foreign holding or with not more than 26 per cent foreign
holding.
"The domestic insurance brokers should be given skill development training to hone their skills made them atmanirbhar (self-dependent) instead of promoting big players. The government should also come out with some schemes to safeguard the interest of the Indian brokers,"
he said.
