The Insurance Marketing Firm (IMF), a new insurance distribution channel, can sell only retail lines of general insurance products and existing agents cannot migrate to it without surrendering their licence, according to the regulations governing the IMF.
Sectoral regulator Insurance Regulatory and Development Authority of India (IRDAI) on Monday issued the notified regulations, creating a new insurance distribution channel called IMF.
As per the regulations, an IMF can represent a maximum of two life insurance companies, two general insurance companies and two health insurance companies at any point of time.
In the case of general insurance policies, the IMF can procure only retail lines of insurance products like the motor, health, personal accident, householders, shopkeepers and such other products.
The regulations define an IMF as an entity registered with IRDAI to solicit or procure life, general insurance products.
The IMF can also undertake back office activities of insurers, become an approved person of insurance repositories, carry out survey and loss assessment work and any other insurance related activity allowed by IRDAI.
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The IMF by employing qualified people can also sell mutual funds, pension products, banking services, financial products of banks, non-insurance products offered by Department of Posts and any other financial product or activity permitted by IRDAI.
The IMF should have a minimum net worth of Rs.10 lakh and the foreign equity capped at 49 percent.
The IMF will have two kinds of marketing personnel-- one to sell insurance policies and the other to sell non-insurance financial products.
As to the source of revenue, insurers will pay only the IMF for sales of their products at the rates specified by IRDAI.
In addition, IMF can receive fees or charges from life insurers for training the insurance sales person (ISP), not exceeding 50 percent of the first year commission and 10 percent renewal commission.
No such payment shall be made in case of general/health insurance business.
The IMF can earn from provided insurance related services, survey and loss assessment and also from other financial organisations whose product the entity is selling.
According to the regulations, every ISP will be paid a minimum salary of Rs.5,000 per month or such other sum that IRDAI may specify.
Addressing the fears of insurers, IRDAI has banned migration of existing insurance agents to IMF without surrendering the licence.