NEW DELHI:
Insurance brokers
have written to the regulator seeking relief for businesses in payment of premium and a request that they be categorised as essential services along with
insurance
companies. The brokers had also sought the temporary lifting of a key law that bars insurers from taking on risk unless they receive the premium.
In the wake of the Covid crisis, the government had notified insurance companies as essential services. Through a gazette notification, the government also allowed motor third-party policies and health policies, which fall due during the lockdown, to be renewed on or before April 21 while ensuring continuity from the renewal date.
In a letter to the Insurance Regulatory and Development Authority of India (IRDAI), the Insurance Brokers Association of India said several businesses were facing hardship in renewing insurance policies.
“Businesses are now totally closed except for essential services. All businesses are facing severe cash flow issues and staring at losses in this and subsequent losses. At the same time, almost all the occupancies in regards to property insurance have seen at least a 2-3 times increase in premium due to GIC recent endorsement in the treaties of various insurers.”
According to GIC officials, the increase in the premium had been announced several months earlier and a hike was necessitated by the adverse clams ratio. Insurance companies said that it was not possible for them to grant any relief in premium payment as section 64 VB of the Insurance Act required companies to collect payment in advance before assuming any risk.
“This is a time of unprecedented financial hardship for most businesses in India and hence we request you to kindly consider allowing the payment of premium in monthly installments which would provide urgent relief to policyholders for the premium agreed with the insurer,” the letter said.
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