Insurance Marketing Firm

Overview of Insurance Marketing Firm

Insurance marketing companies are a new business form and distribution channel in the insurance field. This amount was collected by one of the Insurance Commissions in 2007. A group of companies formed to sell products related to the sale of insurance and mutual funds.In addition, the main plan was to sell shares, pension plans and financial services.

Insurance marketing companies provide services similar to insurance sales companies. A company wishing to operate as an insurance distributor must obtain an Insurance Distributor License. Insurance marketing companies work with insurance companies to market their products. To obtain an insurance distributor license, the applicant must be a corporation, LLP, cooperative, or other recognized legal entity. An individual cannot be an insurance distributor.

These companies are free to sell insurance products on behalf of various insurance companies. However, insurance marketers must follow certain guidelines when dealing with customers. Marketing companies must be transparent and discreet when dealing with customers. Insurance distributors do not have exclusive agreements with insurance companies. You can work for different insurance companies. An insurance marketing company employs an insurance sales representative (ISP) to conduct marketing and promotional activities on behalf of the insurance marketing company. A financial manager may be appointed by an insurance marketing firm known as a Financial Services Executive (FSEs). These executives are responsible for recruiting and marketing non-insurance products regulated by other agencies. The following laws, rules and regulations apply to the activities of insurance distributors.

• Insurance Regulatory and Development Authority of India (Registration of Insurance Marketing Firm) Regulations, 2015
• Insurance Act, 1938
• Insurance Regulatory and Development Authority Act, 1999

The main regulatory body for Insurance Distributor Licensing is the Insurance Regulatory and Development Authority of India (IRDAI). Insurance Agent License is also regulated by Reserve Bank of India, Securities and Exchange Commission of India, Pension Fund Regulatory and Development Authority, Ministry of Posts and Telecommunications.

Eligibility criteria for Insurance Marketing Firm in India

Corporate Structure

According to Regulation 2.2 of IRDAI (Registration of Insurance Marketing Firm) Regulations, 2015, an applicant for an insurance marketing firm license can be:

1. The Companies Act 2013 or the previous Company Law 1956 established the company.
2. The Limited Liability Partnership Act, 2008 registers a partnership.
3. The Co-operative Society Act 1912 registers the co-operative society.
4. Any other individual or company that is allowed to conduct the business related to an Insurance Marketing Firm.

Capital Requirements

According to Regulation 6 of IRDAI (Registration of Insurance Marketing Firm) Regulations, 2015, an applicant has to meet the following capital requirements to apply for an insurance marketing firm license:

Net Worth

1. Net Worth of the applicant must not be less than Rs 10 lakhs.
2. If the applicant is applying to act as an Insurance Marketing Firm in a particular district, then the applicant’s net worth must be at least Rs 5 lakhs.
3. The applicant has to ensure that the net worth of the company is maintained at all times. For this purpose, a certificate must be submitted, which is certified by a chartered accountant within 3 months of the closing of the financial year.

Foreign Holding

• Aggregate holdings of equity shares/ contribution in the firm by foreign investors (including portfolio investors) should not exceed 49% of contribution/ paid up equity capital of Insurance marketing firm at any time.

Principal Officer

1. Associate/Fellow of the Insurance Institute of India, Mumbai;
2. Associate/Fellow of the Institute of Actuaries of India;
3. Associate/Fellow of Chartered Insurance Institute, London;
4. Postgraduate qualification of the Institute of Insurance and Risk Management, Hyderabad;
5. Graduate with Insurance experience of five years preceding the year in which the application is made;
6. Graduate with ten years of experience in the financial services sector preceding the year in which the application is made.
7. Apart from this, the principal officer must satisfy training requirements as per the rules and regulations of the authority.
8. The directors, principal officers, and shareholders of the insurance marketing firm must not be disqualified under any law in force. They must also satisfy the criteria of the FIT and PROPER test.
9. The Principal Officers must also meet the prescribed General Eligibility Criterion prescribed for them.

Name of the Business

1. The Insurance marketing firm must have in its name the following words ‘ Insurance Marketing Firm.

Office Space/ Facilities

1. The applicant applying for an Insurance Marketing Firm Licence must also satisfy necessary infrastructure such as adequate office space, equipment, trained manpower, and IT infrastructure to effectively discharge its activities.

Purpose of the Business

1. The applicant should ensure that the main objects of the business are insurance marketing. These should be covered in the subject matter provisions of the AOA and MOA. To secure the insurance marketing firm’s licence, activities must be according to the set of activities approved by the authority.

No refusal of application

1. An applicant must not be denied a previous insurance marketing company license application.

Certification Requirements of ISP and FSE

1. The ISP and the FSE has to satisfy the certification and training requirements as required by the authority.
2. The ISP hired by the insurance company must market insurance products related to life insurance, non-life insurance, health insurance and must have a valid certificate as required by the competent authority.
3. FSE must have an independent financial licence from financial authorities.
4. The ISP must have received training in insurance marketing as prescribed by the competent authority and have passed an exam held by the competent authority.
5. ISP for an insurance marketing firm should have the same training requirements as the Principal Officer.
6. FSE must fulfil the necessary training requirements when appointed by the Insurance Marketing Firm.

Marketing of Insurance Products

• Under IRDAI, insurance marketing companies are allowed to market and tout insurance-related products. The product categories that may be required are health, property and casualty and life insurance products. The insurance marketer is allowed to represent a maximum of two life insurers, two health insurers and two non-life insurers at any given time. Insurance marketing firms can only market individual line of products related to health, motor, householders, personal accident and other such products. They cannot market commercial products in the market.

Insurance Servicing Activities

• As per the regulations of the Insurance Regulatory and Development Authority of India (IRDAI), marketing firms can carry out insurance servicing activities on behalf of insurance firms which include undertaking back-end activities of insurers as permitted in the Guidelines on Outsourcing Activities by Insurance Companies issued by the IRDAI. Additionally, Insurance Marketing Firms can become an approved person of Insurance repositories. Apart from this, marketing firms can carry out surveys and access the amount of loss during the incident. Marketing firms have the authority to appoint licensed surveyors and loss assessors for this role. Insurance marketing companies can do other things that the IRDAI says they can do.

Marketing of Financial Services

• Insurance marketers also market other financial products such as mutual funds of financial companies regulated by Securities and Exchange Commission of India (SEBI), pension products regulated by PFRDA management, distribution products of investment advisors approved by SEBI, banking/financial products. SEBI regulates banks/NBFCs, non-insurance products offered by Post Office, Government of India and any other financial products or activities authorized by IRDAI from time to time.

Insurance Marketing Firm Licensing Conditions

1. The person who sells insurance needs to be able to offer different types of insurance from different companies. They should be able to offer life insurance, car insurance, and health insurance from two different companies for each type.
2. The insurance marketing firm must inform the authorities if there is any form of change in the business structure.
3. The insurance marketing firm must redress all grievances of customers within 15 days of receipt of the complaint.
4. The insurance marketing firm must reasonably conduct their business under the rules laid down by the IRDAI.
5. Insurance marketing firm should not conduct multi-level marketing or solicitation.
   The insurance marketing firm must ensure compliance with the code of conduct related to FSE and ISP.
6. Insurance marketing firm shall secure policies commensurate to their business and the number of ISP recruited.
7. The insurance marketing firm must comply with the requirements of other authorities also.

Documents required to request an insurance company

Schedule 2 of the Insurance Distributor Registration Regulations, 2015 (IRDAI) requires applicants to submit the following documents when registering an Insurance Distributor:

1. Submission of relevant information as required in the FORM A.
2. Remittance of requisite fee by demand draft payable at Hyderabad.
3. Submission of charter documents of the applicant MOA and AOA. They must submit the company Bye Laws.
4. Declaration of Fit & Proper criteria from Principal Officer, Directors, and Managing Partners (separately for each person) to be provided in the ‘Fit and Proper Form.’
5. Details of infrastructure, supporting evidence thereof like ownership/lease agreement papers for the office space/equipment/trained manpower for the registered office and the branch offices at various locations.
6. Projections of administrative expenses, salaries and wages, and other expenses, draw the revenue account, the profit and loss account and the balance sheet for the next three years.
7. Organization chart giving a complete picture of the company’s activities like IT, risk assessment, claims settlement, marketing, accounts and back office.
8. Any other information relevant to the nature of services rendered by the applicant for the growth and promotion of insurance business.
9. Any other requirements as deemed necessary by the authority.
10. The directors must sign the application form.

FAQs About Insurance Marketing Firm?