Insurance market regulator has asked the insurers to carry out campaigns to ensure that maximum licenses are renewed. However, IFAs feel that this will not encourage the drop-out agents.
IRDA has issued guidelines notifying the agents to renew their lapsed archived agency licenses within December 31, 2013. For this, IRDA has asked the insurance companies to launch campaigns to renew the archived agency license of such agents.The insurance regulator has also clarified that it will not entertain any request for renewal of license after the specified date.
For the last one year, a large number of licenses of agents were lapsed due to non-submission of mandatory documents. Due to this the numbers of orphan policies have increased. Policyholders insured through these agents are facing servicing problems with the insurers. The insurance regulator is also said to have received many requests from such agents to consider their license renewal.
IRDA has also done away with the examination and training of such agents. However, these agents have to undergo renewal training as mandated by IRDA. Besides, all other regulatory provisions applicable for renewal of licenses would continue to exist.
The insurance regulator has asked the insurer to publicize this among the agents so as to ensure that maximum number of archived agency license is renewed. The insurers have also been asked to submit monthly data pertaining to development of renewal work to IRDA.
Pankaj Mathpal, Optima Money, said that the idea of nurturing orphan policies through this move will not work as it is difficult to convince the drop-out agents. Many agents had left the profession due to multiple reasons. Earlier, some private insurance companies had empanelled a huge number as insurance agents by luring them with hefty commissions even without assessing their interest in the profession. Secondly, a major loophole in insurance sector is that the agents who have completed five years of service are eligible for getting commission from policies throughout its existence even without servicing the policyholders. IRDA needs to come up with new regulations in which policyholders could replace their agents according to their willingness just like it happens in mutual funds industry, he added.
Melvin Joseph, Finvin Finance Planner, said that this will not have much impact on drop-out agents. It is very difficult to retain such agents who are not willing to sell insurance products. IRDA should allow other agents and insurance companies to nurture such orphan policies.