REG­U­LA­TOR IS­SUES DRAFT GUIDE­LINES FOR IN­SUR­ANCE MAR­KET­ING FIRMS IN IN­DIA

Insurance - - INDUSTRY UPDATES -

Source: Asia In­sur­ance Re­view, 4 April 2014

In­dia's In­sur­ance Reg­u­la­tory and Devel­op­ment Au­thor­ity (IRDA) has is­sued draft guide­lines for in­sur­ance mar­ket­ing firms, in a move which paves the way for a new dis­tri­bu­tion chan­nel. An in­sur­ance mar­ket­ing firm will be al­lowed to mar­ket in­sur­ance poli­cies along with other fi­nan­cial prod­ucts such as mu­tual funds that are ap­proved by fi­nan­cial sec­tor reg­u­la­tors, IRDA said. The pro­posed model would be sim­i­lar to that of an in­de­pen­dent fi­nan­cial ad­vi­sor. The in­sur­ance mar­ket­ing firm would be li­censed by IRA to en­gage in­sur­ance sales­per­sons for the pur­pose of mar­ket­ing all kinds of in­sur­ance prod­ucts, and fi­nan­cial ser­vice ex­ec­u­tives for mar­ket­ing mu­tual fund prod­ucts, pen­sion prod­ucts and other au­tho­rised fi­nan­cial prod­ucts. These li­censed in­di­vid­u­als will have to ob­tain the nec­es­sary qual­i­fi­ca­tions and li­cences from the re­spec­tive reg­u­la­tors. The re­mu­ner­a­tion of in­sur­ance sales­per­sons will not be com­mis­sion­based. Ac­cord­ing to the draft rules, they would be paid a fixed amount and a per­for­mance in­cen­tive. The role of the sales­per­sons will lean more to­wards be­ing a bro­ker and they will need to keep the in­ter­ests of their cus­tomers paramount. To be an in­sur­ance mar­ket­ing firm, a com­pany will need to have net worth of at least INR1 mil­lion (US$16,600) at all times and buy a pro­fes­sional in­dem­nity in­sur­ance pol­icy that is equal to four times the busi­ness turnover of the mar­ket­ing firm. The li­cence will be given for three years. In­sur­ance mar­ket­ing firms will be al­lowed to charge com­mis­sions and fees to cover mar­ket­ing ex­penses, ac­cord­ing to the draft.

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