According to data available on the Insurance Regulatory & Development Authority (IRDA) website, no new insurance broker licenses have been granted this year. In the year 2009, only three new licenses were awarded.
“The process is time-consuming. It’s not a matter of not issuing licenses but it’s a matter of not renewing them. In fact, IRDA has gone on record to say that brokers are not responding fast enough.
New applications have probably trickled down to nothing because the viability of a direct broker has come into serious difficulty,” said Fali A Poncha, chairman, International Reinsurance and Insurance Consultancy and Broking Services.
More than 50 broker licenses have already expired and are still under renewal scrutiny. Some of these insurance broker licenses had been cancelled, barred, or suspended by IRDA in September 2009. Seven licenses were given an extension of six months—which have already expired between June-November 2009—while six were given an extension of one year out of which four have already expired and two are due to expire in the next few months as on 30 September 2009. A total of 15 licenses have been cancelled by the regulator since 2005, out of which five were cancelled in the year 2008, one in 2009, five in 2007, three in 2006, and one in 2005.
Pritam Ins. Brokers Pvt Ltd, a Delhi-based direct broker, was refused renewal of its license which expired on 18 August 2008.
“The effort of procuring and servicing the business has been exhaustive. There is a 60%-90% discount range and the earnings have frozen on the basis of premium. It’s not an attractive proposition for people to invest in infrastructure and become a broker. There’s a huge reduction in premium rate across the board. They are renewing, but the process takes a lot of time in the procedure, inquiries, and answers from brokers etc,” added Mr Poncha. — Ravi Samalad