CLIA is almost scrapped through
Insurance amendment Ordinance 2014, IRDA has introduced a new channel of Distribution called Insurance
Marketing Firms(IMF) w.e.f 28-02-2015. Any Individual who is Graduate
with Insurance experience of five years can apply for a License of IMF. Many
retired LICians can start these firms. The IMF will recruit Insurance Sales Person who is
a rolled employee of the firm and the Insurance Companies need to pay the
remuneration of ISP(insurance sales persion) which is not less than Rs 5000 per month. In effect it’s called
paid agent(CPA).
Capital Requirements//
The individual taking IMF
need to establish himself that he had Net worth of Rs 10,00,000/-. A chartered
accountant certificate to this effect is only required.
Multiple tie ups with
Insurance Companies//
Registration of Insurance
Marketing Firm by engaging ISP for the purpose of soliciting and procuring
Insurance Products of two Life, two General and two Health Insurance companies
at any point of time, under intimation to the Authority.
The requirements for
becoming ISP//
1. 12th pass
2. Passing the specific
test for ISP (50 hours training)
Remuneration to IMF//
The remuneration payable
to Insurance Marketing Firm by the Insurer, for the solicitation of policies by
the ISPs shall be as specified by the Authority, from time to time, under Secs.
40(1) and 40(2) of the Act, as amended from time to time
Every ISP employed by the
Insurance Marketing Firm shall be paid a fixed monthly salary, which is not
lower than Rs. 5,000 per month or such other sum as may be specified by the
Authority from time to time.
In addition, the
Insurance Marketing Firm 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 shall not exceed 50% of first year commission and 10% of
renewal commission received by IMF.
No such payment shall be
made in case of general/health insurance business.
The life insurance
companies shall have to disclose to the Authority upfront at the time of filing
their products under file & use guidelines on payment of such fees or
charges to the Insurance Marketing Firm.
Job Security for ISP//
Ø The Insurance marketing
Firm under no circumstances can dismiss the ISP from employment during the
period of the registration i.e. for 3 years, except as allowed under Reg. 27
(2) (b). So no cost norms or MBG.
Ø There is no age bar
specified in the regulations regarding Insurance Sales Person.
Ø There is no recruitment
bar of ISP specified in the Regulations.
GOIB for ISP//
In addition to the
minimum amount specified above, the Insurance Marketing Firm, depending upon
ISPs performance can pay him additional incentives, which are declared upfront
and form part of the employment agreement between him and the Insurance Marketing
Firm.
Indemnity Insurance// The
IMF and its ISP need to take compulsorily Loss reducing Indemnity Insurance for
10 lakhs where in there is any dispute with customer and found that there was
misconduct or fraud, the Indemnity insurance will take care of the losses. So
no fear of writing MHR
Agents can become ISP// Existing
agents can surrender there license and Join IMF as ISP. For an ISP to become an
Insurance agent NOC from IMF is required.
Already there is
reluctance from people to join as agents since there is no fixed salary, here
they can get fixed salary + Incentives, Job security, No MAB and can sell LIFE,
General and Health insurance of 2 companies each. Private companies will
definitely promote these kinds of marketing firms and there will be lot of mis
selling in the Market and the biggest surprise is for conducting Inspection in
IMF by IRDA ten days prior notice to be given. Acche din ayegga?
There may be omission and
Correction in this article, please suggest any modifications required
see the
Gazette Notification of the IMF regulations in IRDA website
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