IRDAI has asked insurance intermediaries to buy professional indemnity policy.
With this, insurance brokers, insurance web aggregators, corporate agents, and insurance marketing firms will have to buy professional indemnity policies. However, the insurance regulator has exempted individual agents from buying such policies.
Professional indemnity insurance protects policyholders against any litigation due to errors or negligence in their practice. In the case of insurance intermediaries, such errors can occur due to judgmental errors. So far, professional indemnity insurance cover was available only for doctors, hospitals, lawyers, solicitors, chartered accountants, management consultants, architects, and financial advisors.
All general insurance companies will have to offer such a policy for intermediaries. “An insurer shall issue an annual policy to the insurance intermediary. The insurer shall endeavor to issue a long-term policy valid for the period of the 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,” said IRDAI.
These guidelines will come into force from July 1, 2021.