Four insurance marketing firms get licence

Firms will solicit, procure insurance products; no entity among them to sell other financial products

The insurance sector currently has one distribution channel in the form of insurance marketing firms. While four such entities have been granted licence to operate, none of them has opted to sell all financial products as permitted by the Insurance Regulatory Authority of India (Irdai).

According to Irdai, insurance marketing firms can solicit or procure insurance products, undertake insurance service activities, and distribute other financial products. The four insurance marketing firms are Teamhealth Insurance Marketing, Pune; Six Sigma Financial Solutions Insurance Marketing, Chennai; BellWether Insurance Marketing Firm, Haryana; and FuturisticLife Insurance Marketing Firm, based in Mathura.

While all of them are involved in soliciting and procuring insurance products, three of them are also involved in back-office activities of insurers.

Insurers say while the new channel might help them get more business, some constrains are yet to be resolved. “They have said the sales person appointed should be from the same district. This could pose some restrictions since some such areas might already have enough channels for sales,” said the products head at a private insurance company.

Insurance marketing firms are supposed to employ local insurance sales persons to solicit or procure insurance products. To encourage more people to join the sector, Irdai said every sales person employed by the insurance marketing firm should be paid a fixed monthly salary of not less than Rs 5,000. According to rules, these firms can enter into tie-ups with two insurers each in life, non-life and standalone health insurance.