Soon insurance intermediaries will have to cover themselves with professional indemnity insurance policy.
IRDAI has constituted a seven-member committee headed by Yegnapriya Bharat, Chief General Manager, Non Life, IRDAI to draft terms and conditions for standard indemnity policy dedicated for insurance intermediaries.
IRDAI said that all insurance intermediaries engaged in distribution of insurance policies like insurance brokers, insurance web aggregators, corporate agents and insurance marketing firms will be required to take professional indemnity insurance. IRDAI said, “The Insurance Intermediaries engaged in solicitation and distribution of Insurance products, viz., insurance brokers, insurance web aggregators, corporate agents and insurance marketing firms are required to take professional indemnity insurance policies in order to get themselves indemnified from the claims lodged against them, arising out of the contingencies mentioned in the Regulations governing them.”
However, there is no clarity if insurance agents will be required to get themselves professional indemnity policy.
Professional indemnity insurance protects policyholders against any litigation due to errors or negligence in their practice. In case of insurance intermediaries, such errors can occur due to judgmental errors. So far, professional indemnity insurance cover was only available for doctors, hospitals, lawyers, solicitors, chartered accountants, management consultants, architects and financial advisors.
Industry data indicates that policyholders can buy such a policy of Rs.5 crore by paying a premium of Rs.1.5- 2 lakh.
The committee will submit its report within a month.