Code of conduct
Code of conduct
Every insurance broker shall follow recognized standards of professional conduct
and discharge his functions in the interest of the policyholders.
Conduct in matters relating to client's relationship
Conduct its dealings with client's with utmost good faith and integrity at all times;
Act with care and diligence;
Ensure that the client understands his relationship with the broker and on whose
behalf the broker is acting;
Treat all information supplied by the prospective client's as completely confidential
to themselves and to the insurer(s) to which the business is being offered;
Take appropriate steps to maintain the security of confidential documents in their
possession;
Hold specific authority of client to develop terms;
Understand the type of client it is dealing with and the extent of the client's
awareness of risk and insurance;
Obtain written mandate from client to represent the client to the insurer and communicate
the grant of a cover to the client after effecting insurance;
Obtain written mandate from client to represent the client to the insurer/ reinsurer;
and confirm cover to the insurer after effecting re-insurance, and submit relevant
reinsurance acceptance and placement slips;
Avoid conflict of interest.
Conduct in matters relating to Sales practices - Every insurance
broker shall: -
Confirm that it is a member of the Insurance Brokers Association of India or such
a body of brokers as approved by the Authority which has a memorandum of understanding
with the Authority;
Confirm that he does not employ agents or canvassers to bring in business;
Identify it and explain as soon as possible the degree of choice in the products
that are on offer;
Ensure that the client understands the type of service it can offer;
Ensure that the policy proposed is suitable to the needs of the prospective client;
Give advice only on those matters in which it is knowledgeable and seek or recommend
other specialist for advice when necessary;
Not make inaccurate or unfair criticisms of any insurer or any member of the Insurance
Brokers Association of India or member of such body of brokers as approved by the
Authority;
Explain why a policy or policies are proposed and provide comparisons in terms of
price cover or service where there is a choice of products;
State the period of cover for which the quotation remains valid if the proposed
cover is not affected immediately;
Explain when and how the premium is payable and how such premium is to be collected,
where another party is financing all or part of the premium, full details shall
be given to the client including any obligations that the client may owe to that
party; and
Explain the procedures to follow in the event of a loss.
Conduct in relation to furnishing of information - Every insurance
broker shall:
Ensure that the consequences of non-disclosure and inaccuracies are pointed out
to the prospective client;
Avoid influencing the prospective client and make it clear that all the answers
or statements given are the latter's -own responsibility. Ask the client to carefully
check details of information given in the documents and request the client to make
true, fair and complete disclosure where it believes that the client has not done
so and in case further disclosure is not forthcoming it should consider declining
to act further;
Explain to the client the importance of disclosing all subsequent changes that might
affect the insurance throughout the duration of the policy; and
Disclose on behalf of its client all material facts within its knowledge and give
a fair presentation of the risk.
Conduct in relation to explanation of insurance contract - Every
insurance broker shall:
Provide the list of insurer(s) participating under the insurance contract and advice
any subsequent changes thereafter;
Explain all the essential provisions of the cover afforded by the policy recommended
by him so that, as far as possible, the prospective client understands what is being
purchased;
Quote terms exactly as provided by insurer;
Draw attention to any warranty imposed under the policy, major or unusual restrictions,
and exclusions under the policy and explain how the contract may be cancelled;
Provide the client with prompt written confirmation that insurance has been affected.
If the final policy wording is not included with this confirmation, the same shall
be forwarded as soon as possible;
Notify changes to the terms and conditions of any insurance contract and give reasonable
notice before any changes take effect;
Advice its client's of any insurance proposed on their behalf which will be effected
with an insurer outside India, where permitted, and, if appropriate, of the possible
risks involved; and
Conduct in relation to renewal of policies - Every insurance
broker shall:
Ensure that its client is aware of the expiry date of the insurance even if it chooses
not to offer further cover to the client;
Ensure that renewal notices contain a warning about the duty of disclosure including
the necessity to advice changes affecting the policy, which have occurred since
the policy inception or the last renewal date;
Ensure that renewal notices contain a requirement for keeping a record (including
copies of letters) of all information supplied to the insurer for the purpose of
renewal of the contract;
Ensure that the client receives the insurer's renewal invitation well in time before
the expiry date.
Conduct in relation to claim by client - Every insurance broker
shall:
Explain to its client's their obligation to notify claims promptly and to disclose
all material facts and advice subsequent developments as soon as possible;
Request the client to make true, fair and complete disclosure where it believes
that the client has not done so. If further disclosure is not forthcoming it shall
consider declining to act further for the client;
Give prompt advice to the client of any requirements concerning the claim;
Forward any information received from the client regarding a claim or an incident
that may give rise to a claim without delay, and in any event within three working
days;
Advice the client without delay of the insurer's decision or otherwise of a claim;
and give all reasonable assistance to the client in pursuing his claim.
Provided that the insurance broker shall not take up recovery assignment on a policy
contract which has not been serviced through him or should not work as a claims
consultant for a policy which has not been serviced through him.
Conduct in relation to receipt of complaints - Every insurance
broker shall:-
Ensure that letters of instruction, policies and renewal documents contain details
of complaints handling procedures;
Accept complaints either by phone or in writing;
Acknowledge a complaint within fourteen days from the receipt of correspondence,
advice the member of staff who will be dealing with the complaint and the timetable
for dealing with it;
Ensure that response letters are sent and inform the complainant of what he may
do if he is unhappy with the response;
Ensure that complaints are dealt with at a suitably senior level;
Have in place a system for recording and monitoring complaints.
Conduct in relation to documentation - Every insurance broker
shall:-
Ensure that any documents issued comply with all statutory or regulatory requirements
from time to time in force;
Send policy documentation without avoidable delay,
Make available, with policy documentation, advice that the documentation shall be
read carefully and retained by the client;
Not withhold documentation from its client's without their consent, unless adequate
and justifiable reasons are disclosed in writing and without delay to the client.
Where documentation is withheld, the client must still receive full details of the
insurance contract;
Acknowledge receipt of all monies received in connection with an insurance policy;
Ensure that they reply is sent promptly or use its best Endeavour's to obtain a
prompt reply to all correspondence;
Ensure that all written terms and conditions are fair in substance and set out,
clearly and in plain language, client's rights and responsibilities; and
Subject to the payment of any monies owed to it, make available to any new insurance
broker instructed by the client all documentation to which the client is entitled
and which is necessary for the new insurance broker to act on behalf of the client.
Conduct in matters relating to advertising - Every insurance
broker shall conform to the relevant provisions of the Insurance Regulatory and
Development Authority (Insurance Advertisements and Disclosure) Regulations, 2000,
and :-
Ensure that statements made are not misleading or extravagant;
Where appropriate, distinguish between contractual benefits which the insurance
policy is bound to provide and non-contractual benefits which may be provided;
Ensure that advertisements shall not be restricted to the policies of one insurer,
except where the reasons for such restriction are fully explained with the prior
approval of that insurer;
Ensure that advertisements contain nothing which is in breach of the law nor omit
anything which the law requires;
Ensure that advertisement does not encourage or condone defiance or breach of the
law;
Ensure that advertisements contain nothing which is likely, in the light of generally
prevailing standards of decency and propriety, to cause grave or widespread offence
or to cause disharmony;
Ensure that advertisements are not so framed as to abuse the trust of client's or
exploit their lack of experience or knowledge;
Ensure that all descriptions, claims and comparisons, which relate to matters of
objectively ascertainable fact shall be capable of substantiation.
Conduct in matters relating receipt of remuneration - Every
insurance broker shall:
Disclose whether in addition to the remuneration prescribed under these regulations,
he proposes to charge the client, and if so in what manner;
Advice the client in writing of the insurance premium and any fees or charges separately
and the purpose of any related services;
If requested by a client, disclose the amount of remuneration or other remuneration
it receives as a result of effecting insurance for that client. This will include
any payment received as a result of securing on behalf of the client any service
additional to the arrangement of the contract of insurance; and
Advice its client's, prior to effecting the insurance, of their intention to make
any deductions from the amount of claim collected for a client, where this is a
recognized practice for the type of insurance concerned.
Conduct in relation to matters relating to training - Every
insurance broker shall:
That its staff are aware of and adhere to the standards expected of them by this
code;
Ensure that staff is competent, suitable and have been given adequate training;
Ensure that there is a system in place to monitor the quality of advice given by
its staff;
Ensure that members of staff are aware of legal requirements including the law of
agency affecting their activities; and only handle classes of business in which
they are competent;
Draw the attention of the client to Section 41 of the Act, which prohibits rebating
and sharing of commission.
Every insurance broker shall display in every office where it is carrying on business
and to which the public have access a notice to the effect that a copy of the code
of conduct is available upon request and that if a member of the public wishes to
make a complaint or requires the assistance of the Authority in resolving a dispute,
he may write to the Authority.
An insurance broker as defined in these regulations shall not act as an insurance
agent of any insurer under section 42 of the Act.
Every insurance broker shall abide by the provisions of the Insurance Act, 1938
(4 of 1938), Insurance Regulatory and Development Authority Act 1999(41 of 1999),
rules and regulations made there under which may be applicable and relevant to the
activities carried on by them as insurance brokers.