Mukherji committee report stirs a hornet''s nest

Venkatachari Jagannathan
07 January 2004

A hot debate is expected when the Insurance Regulatory and Development Authority's (IRDA) General Insurance Council meeting is held this month when the recently submitted A C Mukherji Committee report on remuneration of insurance intermediaries will be discussed.

The Report, released at the fag end of 2003, has stirred a hornet's nest. While the broking community is understandably upset with the committee's recommendations of effecting a reduction in brokerage and scrapping of composite broking (broking firms doing direct and reinsurance business) some private sector insurance officials have also expressed concern.

A chief executive of a private general insurance company says, "The regulations relating to brokers were made after much deliberations and not much time has lapsed since then. If the IRDA decides to accept the recommendations of the Mukherji Committee report brokers will have to redraw their business plans."

According to the private insurer, ever since the Malhotra Committee submitted its report in the nineties the issue has been debated in several forums but in all these forums, held in the pre and post liberalization era, the views of the four government-owned general insurance giants were not taken.

He admits that to some extent the public sector insurance companies were to be blamed for this as the top brass of the companies were somewhat media shy and when they protested, a bit feebly, that brokers do not add value in a market where the premium rates are administered by the Tariff Advisory Committee (the premium rate fixing body for the general insurance industry) they were not heard.