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Insurance Marketing Firm | Company Vakil

Introduction

The Insurance Regulatory and Development Authority of India (IRDA) had introduced Insurance Marketing Firm in 2015 to increase insurance penetration in the country through an area-wise registration approach. These are the entity who are registered in India and helps in soliciting insurance policies and other financial products. With the rise of FDI in India, Insurance sector have immense potential in coming years. 

IRDA Insurance Marketing Firm

It is an entity:

  • Registered by IRDA
  • To solicit or procure insurance products
  • To undertake insurance service activities
  • To distribute other financial products

Who can become IMF?

  • A Company registered under Companies Act
  • LLP registered under LLP Act
  • Registered Co-operative society
  • Who can maintain net worth of minimum Rs 10 lakhs floating at all times
  • Should have ‘Insurance Marketing’ written at the end of the company’s name
  •   License can be issued for 3 years which can be renewed before 90 days of expiry.

Scope

  • Two Life Insurance, Two General Insurance and Two Health Insurance companies
  • Mutual Funds
  • Banking products
  • Pension products by PFRDA
  • Other financial products marketed by SEBI licensed investment advisors

Key Personnel

  • Principal officer, who is the executive head and is responsible for regulatory compliance and administrative work
  • Sales person, for solicitation of insurance policies
  • Financial service executive, for advisory and sales of other financial products

Area of operation

Initially an Insurance Marketing Company can only operate in one district only. After 3 years on its renewal, it can operate for more districts.

Remuneration

  • Commission from sale of policies
  • Fee for expenses incurred on marketing, infrastructure and performance based incentives

According to IRDA, Fee cannot exceed 50% of the limit of expenses of management ceiling

Functions of a IRDA Insurance Marketing Firm

  1. Soliciting and procuring Insurance Products

Insurance Marketing Firm can solicit and procure only Two Life, Two General and Two Health Insurance companies at any point of time. In General Insurance, only retail lines of insurance products and use guidelines of insurance products approved by IRDA like motor, health, personal accident, householders, shopkeepers etc.

  1. Providing Insurance Servicing Activities

Insurance service activities include survey and loss assessment work, becoming approved person of Insurance Repositories, back office activities and any other insurance related activity permitted by IRDA. 

  1. Marketing of other financial products

Financial products like Mutual funds, pension products regulated by PFRDA, other products distributed by SBI licensed investment advisors, financial products of banks, NBFC regulated by RBI, non-insurance products by Department of posts and any other financial product permitted by IRDA. 

Eligibility criteria for Insurance Marketing Firm Registration

  1. Following entity can apply for IRDA Insurance Marketing Firm registration:
  • A private limited company
  • A Limited Liability Partnership (LLP)
  • Co-operative Societies under Co-operative Societies Act, 1912
  • Any other person as may be recognised by the IRDA to act as an Insurance Marketing Firm

2.   As per Companies Act, 2013, a company should have a net worth of not less than Rs 10 lakhs.

3. The company whether it is a Private limited company or LLP, the name should end with the words “Insurance Marketing Firm”

4. Maintain a professional indemnity insurance cover throughout the validity of the insurance marketing firm. Insurance marketing firm which is newly registered, must produce a policy within twelve months from date of registration with 10 lakhs minimum sum insured. 

5. Principal officer of the firm must satisfy one of the following conditions:

  • Be an Associate/Fellow of the Insurance Institute of India, Mumbai; or
  • Be an Associate/Fellow of the Institute of Actuaries of India; or
  • Be an Associate/Fellow of Chartered Insurance Institute, London; or
  • Be a Post graduate qualification of the Institute of Insurance and Risk Management, Hyderabad; or
  • Be a Graduate with Insurance experience of five years preceding the year in which the application is made; or
  • Be a Graduate with 10 years of experience in financial services sector preceding the year in which the application is made.

6. Principal officer of the firm must undergo fifty hours of Insurance Marketing Firm training from an institute & need to pass the examination conducted by the institute.

7. Principal offer must be a ‘Fit and proper person’. ‘Fit and proper person’ means having financial integrity, absence of convictions or civil liabilities, competence, good reputation & character, efficiency & honesty and absence of any disqualification to act as an intermediary. 

8. Qualification of Financial Services Executive/Insurance Sales Person:

  • Pass in 12th Class or equivalent examination from a recognized Board/Institution
  • Should have undergone the Insurance Marketing Firm Training prescribed by the Authority and qualified in the Insurance Marketing Firm Examination from an institution recognized by the Authority
  • Should be domiciled in the area of Registration of IMF

9. Have the adequate infrastructure like adequate office space for proper functioning of the firm.

How to Apply for Registration?

  • Submit an application to the Authority in the Form A
  • Remit the non-refundable application fees of five thousand rupees plus applicable tax along with the application for grant of a registration
  • Submit all the necessary documents as mentioned in detail in the application form A – Along with a declaration of principal officer/directors/managing partners satisfying the fit & proper criteria in the prescribed form as my be additionally prescribed by the Authority.
  • Submit copy of the Insurance Marketing firm Exam pass Certificate of the principal Officer and the ISPs proposed to be engaged by the Insurance Marketing Firm
  • Submit the copy of the surveyors and loss assessor license of the person proposed to be employed by Insurance Marketing Firm, If the Insurance Marketing Firm proposed to undertake any insurance survey and loss assessing assignments
  • Submit copy of the approved person certificate of the Insurance repository
  • Submit the copy of the licenses or Authorization of registration obtained by FSE proposed to be employed by the insurance Marketing Firm issued by SEBI, RBI, PFRDA, Post Office for the line of activity proposed to be undertaken

Duplicate Certificate of Registration 

If the certificate of registration being lost or destroyed or mutilated, an Insurance marketing firm shall submit to the authority along with a fee of rupees one thousand and a declaration giving full details regarding the issues of registration and its loss or destruction or mutilation, request for issue of a duplicate certificate of registration.

Validity of Registration

For the period of three years from the date of its issue, registration is valid.

Can an insurance agent  migrate to Insurance Marketing Firm to sell multiple policies?

According to IRDA, Insurance agents cannot join Insurance Marketing Firm but if the Insurance agent surrenders his/her license and qualify broker exam, he/she can get the broking license and join Insurance Marketing Firm. 

Note: To know the registration procedures visit CompanyVakil.com

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