IRDAI Chairman, TS Vijayan has urged insurance companies to encourage their agents to float insurance marketing firm (IMF) to grow their insurance distribution business. He was speaking to media on the sidelines of 18th Annual Insurance Conference #FINCON2017 held today in Mumbai.
Speaking about the current development on insurance marketing firms, he said, “Due to lack of awareness about insurance marketing firm among distributors, it has not picked up well. We are working on this to increase awareness about IMF. In fact, we recently met senior officials of a few insurance companies to discuss how to popularise insurance marketing firms among agents.”
V.K Sharma, Chairman, LIC said, “Around 70% of the Indian population is not insured. Although the insurance industry has substantially grown over the years, the insurance penetration is still below 5% in our country. Considering the growth potential in our economy, a distinct distribution channel like the IMF would work wonders.”
Two years back, the insurance regulator 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.
To start with, the insurance regulator has allowed such distributors to 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.
Existing insurance agents will have to surrender their agency license and pass an IMF examination. Also, the applicant should have a net worth Rs.10 lakh for floating the distribution business. Initially, the license will be issued for three years which has to be be renewed 90 days prior to expiry.
IMF will be required to possess professional indemnity insurance cover of at least Rs.10 lakh. Distributors have to cough up a non-refundable fee of Rs.5,000 along with the application form.
Distributors can submit their IMF applications online on imf.irda.gov.in.
Currently, 101 IMFs are registered with the IRDAI.