Insurance brokers seek premium relief for businesses
NEW DELHI: I have written to the regulator seeking help for companies in paying the premium and requesting that they be classified as essential services along with insurance companies. Brokers also sought the temporary lifting of a key law that prohibits insurers from taking risks 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.
“ Deal es 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 premium increase had been announced several months earlier and the proportion of adverse clams required an increase. Insurance companies said they were unable to grant any relief on premium payment, as section 64 VB of the Insurance Act required companies to collect payment in advance before taking any risk.
This is a time of unprecedented financial hardship for most companies in India and therefore we kindly ask you to consider allowing premium payment in monthly installments that would provide urgent relief to policyholders for the agreed premium with the insurer, the letter said.