The Insurance Regulatory and Development Authority of India (Irdai) in its final guidelines on insurance marketing firms said they could solicit and procure insurance products of two life, two general and two health insurance companies at any point of time, after informing Irdai.
The insurance servicing activities of the insurance marketing firm (IMF) will include these undertaking back-office activities of insurers as allowed in the guidelines on outsourcing activities by insurance companies, becoming approved person of insurance repositories. They can also undertaking survey and loss assessment work by employing on their rolls licensed surveyor & loss assessors.
Under these norms, IMFs can market and service insurance through insurance sales persons, apart from marketing other financial products through financial service executives (FSE) engaged by an IMF. These include products of mutual fund companies; pension products of Pension Fund Regulatory and Development Authority; other financial products distributed by Securities and Exchange Board of India licensed investment advisors and banking/ financial products of banks/ non-banking financial companies regulated by the Reserve Bank of India. FSE can also market non-insurance products offered by Department of Posts, Government of India.
In general insurance, these firms can deal with only retail insurance products including motor, health, travel and other similar policies. Apart from the remuneration, the IMF may receive fees or charges from life insurance companies only in the form of service charges for recruitment, training and mentoring of their ISPs. These fees or charges must not exceed 50 per cent of first year commission and 10 per cent of renewal commission received by the Insurance Marketing Firm. No such payment shall be made in case of general/health insurance business.
For being an insurance marketing firm, the applicant should have a minimum net worth of Rs 10 lakh. The insurance marketing firm has to designate a principal officer who shall be the overall in-charge and shall be responsible for regulatory compliance to the authority. The licence given to them will be valid for three years after which it can be renewed.
Curated from: Green light to insurance marketing tie-ups