BANGALORE: Insurance brokers, who act as intermediaries between clients and insurance companies, have demanded that they be paid brokerage charges for selling what they call ‘terrorism cover’.
Post 26/11, corporates have been showing a lot of interest in terrorism cover, which will cover the damages in the event of a terrorist attack, and brokers are not being paid brokerage when such a cover is sold, according to the Insurance Brokers Association of India (IBAI).
The association, whose sixth annual summit kicked off on Monday, has demanded that they be allowed to collect brokerage charges on terrorism cover.
The IBAI said that it will deliberate on brokerage on terrorism and other issues faced by the brokers, including issues related to appointment of sub-brokers, remuneration, training, consultancy and risk management, claims handling on stand alone basis and renewal of licenses during the summit.
“Presently, when a client purchases terrorism cover, the awareness of which has increased post 26/11, the broker is not paid a brokerage. When a brokerage is paid for all the other services, why not on terrorism cover,” Bharat J Boda, President, IBAI asked.
Earlier, Insurance Regulatory Development Authority (IRDA) had cautioned insurance companies against policy holders whose identity matches that of those on the United Nations’ list of terrorists or organisations engaged in funding terror attacks. “Brokers are not privy to the UN list. It is the company which does the verification in this case. But money laundering guidance is already in place and we are already required to exercise caution.
This is in the interest of the nation,” said V Shivapathy, Secretary, IBAI.
Major corporations like BHEL, Infosys and Accenture are already insured against any damages from terror attacks.
Terrorism coverage is provided as an additional cover to all risks underwritten under fire, engineering and property section of miscellaneous classes of business.
For personal accident policies, terrorism is an inbuilt cover. To cover terrorism, the Indian Market Terrorism Risk Insurance Pool was initiated by the Indian Non-Life Insurers in 2002. The entire terrorism premium is ceded to the Pool and results are shared by the pool members in proportion to their respective capacities provided.
