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| Sunday, 26 January 2003 |
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Business |  |
| News Business Features Editorial
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16 out of 30 brokers licensed : 'Comply with regulations or lose licence' by SUREKHA GALAGODA The Insurance Board of Sri Lanka (IBSL) has licensed 16 insurance brokers to engage in business out of the 30 applications received by the Board. According to IBSL sources, by December 30, only 12 brokers had the licence to engage in business. Therefore, the IBSL extended the time till end-January to comply with the requirements it had specified. The IBSL, in consultation with the Insurance Brokers Association, requested for an affidavit from each broker to the effect that the broker is not keeping any money beyond the prescribed time limit of 14 days of receiving it from the customer. "At present, around Rs 200-300 million collected as premium from customers is not given by some brokers to the insurance company on time. If a claim is made by the insured, the company cannot be held responsible if it has not received the money within one month. The customer who has paid the premium is the loser. "Therefore, to avoid this unpleasant situation, we have requested all brokers to provide an affidavit. We want to monitor this situation and ensure that it is a thing of the past and will not happen in the future," said the spokesman. "In the event we detect such a case in the future, we will suspend or cancel the broker's licence after an inquiry." "There should be strict regulations when issuing or renewing licences because to improve the broker market, the emphasis should be on quality and not on numbers," said an analyst. The share capital requirement should also be increased to about Rs 5 million from the present Rs 200,000 as the broker has to be stable as an intermediary. Though the broker market in India opened only recently, they require high share capital, which eventually leads to professionalism as they cannot consider it as an alternate job when there are regulations to adhere to. A broker is an intermediary between the company and the customer and does not take any risks while an agent is appointed by a company and is held responsible for the policies he/she sells. According to the IBSL annual report for 2001, there had been 36 insurance brokers who have all concentrated on General Insurance. Their contribution was Rs 2,412 million, amounting to 25.75 per cent of the total insurance business which was worth Rs 9,366 million. According to the report, the contribution of brokers to long-term insurance business was around one per cent. |
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