The Indian insurance industry is expecting the regulator to come out with its regulations allowing new breed of intermediaries -Insurance Marketing Firm (IMF)- that would make corporate agents and brokers unhappy, said industry officials.
"We are expecting the regulator to come out with the regulations soon, say in a week or two. Going by the draft regulations issued earlier there insurance regulator may be crossing swords with pension and mutual fund regulators," a senior official of life insurance industry told IANS preferring anonymity.
Another industry source also expressed similar views.
As per IRDA's draft regulations issued earlier, IMF is an entity licensed by IRDA to market financial products approved by financial sector regulators, by employing persons licensed to market the financial products.
"The insurance broking community will certainly be upset at the IMF regulation as the start-up capital needed is Rs.10 lakh whereas in the case of insurance brokers the minimum capital is Rs.50 lakh," D. Varadarajan, a supreme court advocate and an expert in insurance/company/competition laws told IANS.
"In the case of an insurance marketing firm, there is not even a whisper in the draft Regulations on ceiling on business from a single client, unlike the ceiling as prescribed for a broker, corporate agent and individual agent under the respective Regulations, which is a glaring example of manifest discrimination," Varadarajan said.
According to him, the remuneration pattern suggested for IMF is liberal and would also be a cause of concern for the insurance brokers and corporate agents.
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Varadarajan also visualised a scenario where corporate insurance agents now selling insurance policies/mutual funds/fixed deposits and others would be asked by IRDA to get them registered with it.
"The Regulations, if notified, would result in turf war among IRDA, SEBI (Securities and Exchange Board of India) and PFRDA (Pension Fund Regulatory and Development Authority)," Varadarajan said.
"It is not known whether the Insurance Regulator has taken into confidence for encroaching upon the earmarked turf of SEBI and PFRDA and coming out with this astounding regulatory initiative," he said.