Paving the way for a new distribution channel, the Insurance Regulatory and Development Authority (Irda) issued draft guidelines for insurance marketing firms on Wednesday.
An insurance marketing firm is an entity that 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.
To sell these products there will be two kinds of licensed individuals: an insurance salesperson, who will be responsible for soliciting and marketing insurance products alone, and a financial service executive, who will handle other financial services, such as offering financial advice, sale of mutual funds and the national pension system, or NPS.
These licensed individuals will have to obtain the necessary qualifications and licences from the respective regulators. To become an insurance salesperson the individual needs to have passed Class 10 and needs to clear the insurance brokers examination. Insurance agents are not eligible to become insurance salespersons, and the latter can’t cross over to become agents unless their licences as salespersons are active
.
Financial service executives will need certification from regulatory bodies. For instance, to sell mutual funds, they will need to be certified by the Association of Mutual Funds in India (AMFI). For distributing NPS, they will need to be certified by the Pension Fund Regulatory and Development Authority (PFRDA), and for sale of financial products regulated by the Securities and Exchange Board of India (Sebi), they will need to obtain registration as investment advisers under the Securities and Exchange Board of India (Investment Advisers) Regulations, 2013.
In case of insurance, salespersons will be involved in soliciting insurance policies, but their remuneration will not be commission-based. According to the draft rules, they would be paid a fixed amount and a performance incentive that may be over and above this. The role of the salespersons will lean more towards being a broker in the sense that they will need to keep the interest of their customers paramount.
“Insurance marketing firms will have a fiduciary responsibility towards customers. These are neither insurance brokers nor insurance agents, but a new channel of distribution,” said P. Nandagopal, chief executive officer and managing director of IndiaFirst Life Insurance Co. Ltd. “Insurance brokers in retail currently operate like multiple corporate agents, and having one more distribution channel that is allowed to sell multiple insurance policies may improve this practice. A new distribution channel is a welcome move,” he said.
To be an insurance marketing firm, a company will need to have at least Rs10 lakh of net worth at all times and will have to 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.
According to the draft, insurance marketing firms will be allowed to charge commissions as per the Insurance Act. In addition to this, these will also be able to charge a fee on account of marketing expenses, expenses towards infrastructure and performance-based incentives.
Irda will take feedback till 15 April.
Read the entire draft here:
http://www.irda.gov.in/ADMINCMS/cms/frmGeneral_Layout.aspx?page=PageNo2249
Source : www.livemint.com
No comments:
Post a Comment