While agents and brokers will be rewarded with incentives like gratuity, junkets insurance cover, promotional gifts, office expenses and so on, insurance marketing firms (IMFs) will only be compensated for training their employees, says IRDAI’s latest circular on ‘Payment of commission, remuneration or reward to insurance agent or insurance intermediaries’.
IRDAI has proposed that IMFs can get rewards of up to 50% of the first year commission and 10% of the renewal commission from life insurers to train their employees.
Currently, IMFs can receive fees from insurers apart from commission in the form of service charges for recruitment, training and mentoring of their insurance sales persons. But there is no fixed incentive structure for IMFs.
Earlier this year, IRDAI had legalized incentivizing agents with gifts and junkets.
Two years back, IRDAI created a new distribution channel called ‘Insurance Marketing Firm’ (IMF) in order to increase insurance penetration. Through this channel, distributors are allowed to tie up with multiple insurers so that they could offer a wider choice to investors. IMFs can sell insurance policies of two life, two general and two standalone health insurers. In addition, agents can sell other financial products like mutual funds and pension products by floating an IMF, subject to respective regulatory approval.
Currently, 125 IMFs are registered with the IRDAI.
