Guidelines on professional indemnity policy for insurance intermediaries

New Delhi, Jun 12 (PTI): Regulator IRDAI has come out with guidelines on standard professional indemnity policy for insurance intermediaries, including brokers, corporate agents and web aggregators.
The guidelines issued by the Insurance Regulatory and Development Authority of India (IRDAI) will come into effect from July 1. Professionals and professional entities may be sued by their clients for errors or negligence during the course of their professional duties, as per the guidelines.
A professional indemnity policy is a liability insurance product that protects individuals giving professional advice and professional entities against negligence claims by their clients for errors and omissions. It covers financial loss suffered by the clients resulting from breach of professional duty.
As per the guidelines, every general insurer should endeavour to offer the standard professional indemnity for insurance brokers, corporate agents, web aggregators and insurance marketing firms.
On policy period, the guidelines said: “An insurer shall issue an annual policy to the insurance intermediary. The insurer shall endeavour to issue long-term policy valid for the period of certificate of registration.”
The premium rates will be determined by the insurers depending upon various risk factors and its board approved underwriting policy.
Insurance intermediaries engaged in solicitation and distribution of insurance products are required to take professional indemnity insurance policies.
Data from Irdai showed, gross direct premium of non-life insurance companies rose 11.4 per cent on a yearly basis to Rs 12,316.50 crore in May 2021.
All the 32 non-life insurers’ gross direct premium stood at Rs 11,061.02 crore in May 2020.
Among these, the 25 players in the general insurance sector registered nearly 7.2 per cent growth in premium collection during the month at Rs 10,822.77 crore as against Rs 10,098.30 crore in the year-ago period, as per the data by the Insurance Regulatory and Development Authority of India (Irdai).
The six standalone private sector health insurance companies registered a jump of 66.6 per cent in their gross premium at Rs 1,406.64 crore in May 2021, as against Rs 844.13 crore earlier.
On a cumulative basis, the gross direct premium of all the non-life insurance companies grew by 17.5 per cent to Rs 29,626 crore in April-May 2021-22, as against Rs 25,212.55 crore in the same period of the previous fiscal.