Now banks can sell insurance policies of three life, three general and three standalone health insurance companies.
Corporate agents can now sell multiple insurance products of life, non-life and health insurance companies, providing a wider choice to investors, states IRDAI guidelines on corporate agents.
IRDAI has mandated corporate agents to sell insurance policies of three life, three general and three standalone health insurance companies.
Typically, many banks are corporate agents of their promoter’s group company. Last year, IRDAI and RBI had allowed banks (corporate agents) to act as insurance brokers in order to increase insurance penetration in small cities and rural areas. However, it didn’t take off as expected as many banks are reportedly unwilling to change their model due to stringent compliance.
Corporate agents need to appoint principal officer who will be the executive head and responsible for regulatory compliance and administrative work and insurance sales person to solicit insurance policies. These agents should maintain a net worth Rs. 50 lakh for floating its distribution business.
IRDAI has said that the premium collection from any single client must not exceed 90% of total collection in the first year. Also, corporate agents need to reduce such collections to 75% and 60% in the second and third year respectively. From the fourth year onwards, this limit should not exceed 50% of total premium.
It remains to be seen whether this model will be effective. Share your views and comments now!