Irda tightens norms for appointment of corporate agents

Irda tightens norms for appointment of corporate agents
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First Published: Tue, Jun 08 2010. 06 33 PM IST
Updated: Tue, Jun 08 2010. 06 33 PM IST
New Delhi: Tightening norms for the appointment of corporate agents, insurance regulator Irda has said that agents handling big clients can now only be appointed by officials designated by the company’s board.
Irda, in a circular issued on Monday night, said the decision to appoint a “person holding a valid licence as a corporate agent, on transfer from other insurer, will be taken only in the corporate office of the insurance company.”
According to the new circular, the appointment can be made only by the CEO, CFO or chief marketing/sales officer, among others, designated for the purpose by the board.
The insurers are mandated to submit a list of officers designated for licensing corporate agents by 30 June, and they are required to scrutinize the agent’s track record prior to his/her appointment.
“The officer shall obtain and record the reasons leading to cancellation of Corporate Agency Agreement with the earlier insurer,” the Irda circular said.
Last year, Irda had introduced stringent agency transfer guidelines in a bid to check high turnover among corporate agents. As per the regulations, if any corporate agent wants to stop selling policies of one firm and shift to another, he has to get a no-objection certificate (NOC) from the original company.
It also said that insurance companies have to get contact details of all policyholders, inform each of them that their agent has quit, and give assurances that alternative arrangements are being made to service them.
The regulator said that these arrangements should go beyond a call centre facility, which is also an essential requirement.
In a separate circular, Irda said there have been many instances where the same set of individuals have floated different corporate agencies and employed people without valid licences for selling products.
“...the insurers shall hereby carry out regular on-site inspection of corporate agents, with whom they have corporate agency agreements,” it said.
The process of inspection of corporate agents should be completed by 30 September of every year, starting 2010, it added.
Besides this, the circular directed insurers to verify that, except for commission, no other payments are made to the agents.
Also, buyers should not be compelled to purchase insurance in cases where it is sold as an additional product with banking or other financial investments, the circular added.
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First Published: Tue, Jun 08 2010. 06 33 PM IST