MISP (Motor Insurance Service Provider)

Automotive dealers besides handling their core activity of selling of vehicles, have always been an integral part in coordinating insurance for Motor Insurance.
To recognize this role played by automotive dealers in distributing and servicing motor insurance policies, IRDAI had issued guidelines for Motor Insurance Service Provider on dated 31.08.2017.
IRDAI clarified that the MISP can be sponsored by one or more insurer or one insurance intermediary and not both.

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- In these guidelines, unless the context otherwise requires.

"Act" means the insurance Act, 1938;
"Authority" means the insurance Regulatory and Development Authority of India established under sub-section (1) of Section 3 of the insurance Regulatory and Development Authority Act, 1999 (41 of 1999);
"Automobile Dealer" means a person who is an authorized dealer or a sub-dealer of an automobile manufacturer for selling new or used automotive vehicles.
"Automobile Manufacturer" means a person who is the original equipment manufacturer (OEM) of the automobile.
"Distribution fees" means the amounts paid to the MISP directly by the insurer or by the insurance intermediary as the case may be.
"Motor Insurance Service Provider (MISP)' means an automobile dealer appointed by the insurer or the insurance intermediary to distribute and/ or service motor insurance policies of automotive vehicles sold through it.
"Servicing of insurance business" means insurance activities arising post sale of motor insurance policies and includes:

APPOTNTMENT OF MOTOR INSURANCE SERVICE PROVIDER (MISP)

1. Eligibility conditions for appointment of MISP

(a) Legal structure: Any automobile dealer as defined in guidelines 3(c) above and one who does not attract any of the disqualifications as laid down in Section 42 of the Insurance Act, 1938 shall be eligible to become a MISP.
(b) Main Objects: The MISP shall have in its objects or in its deed or any other similar document, distribution and servicing of motor insurance policies including add-ons.

2. Appointment of MISP

(a) Sponsoring entity (ies): The MISP shall be sponsored by either insurer(s) or an insurance intermediary.
(b) On receipt of request from the MISP, the sponsoring entity shall verify the eligibility conditions given in guideline 4 above.
(c) On being satisfied, the sponsoring entity(ies) shall appoint MISP and issue the appointment letter in the format given in Annexure "1".
(d) The appointment letter shall be based on the PAN number issued to the automobile dealer.
(e) The MISP shall maintain records for a period of at least 7 years from the date of issuance of insurance policy or from date of termination of appointment of MISP whichever is later.
(f) If an insurance intermediary appoints the MISP, then it shall work for the number of insurers as allowed under the respective regulations governing the intermediary.
(g) A MISP may work for one or more insurers either directly or through the insurance intermediaries, if it so desires.

3. Responsibility of sponsoring entity and MISP

(a) The sponsoring entity(ies) shall be responsible for all acts of omission and commission of the MISP.
(b) The MISP shall also be responsible for its acts of omission and commission as well as of its employees.
(c) The MISP shall also comply with the provisions of the lnsurance Act, 1938, the IRDA Act, 1999, the Regulations made there under, guidelines and circulars issued by the Authority from time to time.

4. Training and examination

(a) The MISP shall nominate a person who shall be responsible for its compliances with the guidelines. Such a person shall be called its Designated Person.
(b) The Designated Person and all persons distributing motor insurance policies shall be at least 12th pass and shall undergo training and examination of Point of Sales Person to the extent specified by the Authority.
(c) They will be given unique identification number based on their Aadhaar No.

5. Renewal of permission

(a) The appointment of a MISP shall be normally valid unless revoked in case of insurers and valid as long as the certificate of registration is valid in case of insurance intermediaries.
(b) However the Authority may cancel the appointment at any time, if it is of the view that the activities carried out by the MISP is:
i. Not in the interest of the policyholders
ii. Not conducive for the orderly growth of the industry
iii. Violating the code of conduct given in Chapter III
iv. Not meeting the requirements as specified in these guidelines
v. In violation of the provisions of the Insurance Act, 1938, IRDA Act, 1999, Insurance Rules, Regulations Guidelines, circulars, orders, notices etc issued by the Authority. Provided that before canceling the appointment, the MISP shall be given an opportunity of being heard.

6. Review of operations of the MISP

(a) A periodic review of the controls, systems, procedures, and safeguards put in place by the MISP, shall be carried out, at least once a year, by the sponsoring entity(ies).
(b) The scope of such review of the MISP shall also check compliance to the Act, Rules, Regulations, circulars, guidelines, etc issued by the Authority in addition to these guidelines.
(c) The review shall be placed before the Board of the sponsoring entity or its sub-committee for their observations.
(d) The Authority has the right to undertake by itself or through an external agency an independent inspection into the affairs of the MISP at any time if it so desires.

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