Insurance Cos hiring CAs, ICAI objects

MUMBAI: The traditional accountant has become a hot property for insurance firms. Financial expertise aside, loads of practising chartered accountants have large client-base, making them the ideal people for selling insurance products. Even if private life insurance companies are wooing these accountants, the rulebook may spoil the gameplan.
The Institute of Chartered Accountants of India (ICAI) is of the opinion that practising CAs are not permitted under the law to sell insurance as agents.“Under the Chartered Accountants Act, 1949, no practising CA is permitted to enter into a business arrangement. Selling insurance will lead to a violation of an Act of Parliament,’’ says ICAI president Ashok Chandak.
Some private life insurance companies are hiring practising CAs as insurance agents. ‘‘Everybody is hiring CAs. Logically, they are in a better position to explain the complexities of a product to a prospective client, by virtue of being financial advisors,’’ said a CEO of a private insurance firm.
The entry of private players in insurance sector has brought in several changes in business practices like introduction of sophisticated selling and distribution techniques. The days of aged agents, with little knowledge about the products, will soon be over.
Commenting on the laws that prevent CAs doubling up as insurance agents, OM Kotak Mahindra Life Insurance Company director Shivaji Dham says, ‘‘The laws were put in place at a certain point of time and were probably relevant then. In the new scenario, they should be reviewed.
Customers trust chartered accountants, who are in better position to advise them.’’ And, it works out pretty well for CAs too. They can make more money — through a 40 per cent commission on the premium paid in the first year and 5 per cent in the subsequent years.