According to the draft norms suggested by IRDA, only agents with 5 years’ experience in the life insurance industry will be able to form a super agency.
Life insurers are waiting for IRDA to officially formulate final guidelines to launch the new form of distribution, the super agency model. But one of the norms specified by the regulator may prove a hurdle for new insurers who have been in existence for less than 5 years.
According to the draft regulations formulated by IRDA, only those agents who have experience of 5 years in the life insurance industry with a particular insurer can create a super agency model. Due to this, the new insurers who are yet to complete 5 years can not follow this model.
“A few new insurers like us will not be allowed to launch the model because we are not 5 years old in the industry and hence even our IFAs do not have the minimum experience required to follow the model. We have sent our suggestion to amend this rule to allow professionals having 5 years of experience in the financial space to launch this model,” says P. Nandagopal, Managing Director & CEO, IndiaFirst Life Insurance.
If finally approved by the regulator, the channel could help insurers to lower distribution costs. “We have been asked to send our suggestions. Since we are a new insurer, we have requested IRDA to relook at the guidelines as this channel will also help us to reduce our distribution cost and reach out to a larger consumer base,” said an official from Star Union Dai-ichi Life.
The super agency model was first tried by LIC which was the first to try out this mechanism with its agents. But the model failed to gain popularity among its agents as they needed at least 15 agents to run the super agency model.
When this model was suggested to the IRDA chairman, he readily accepted it and asked the Life Insurance Council to formulate guidelines after carrying out detailed research. The model is still in the discussion phase and there are a few operational issues which the regulator is trying to sort out.
An industry official expects the model to be launched in the next four months. It remains to be seen if IRDA tweaks the proposed guidelines so that fresh entrants into the life insurance industry can also follow the super agency model.
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