After receiving a tepid response for many months, Insurance Marketing Firm (IMF) has finally gained some acceptance among insurance intermediaries.
In just three months, 15 new players have received licenses from IRDAI to float IMF. As a result, the total number of IMFs has increased from 14 as on March 2016 to 29 as on June 2016. In December 2015, there were only 4 insurance marketing firms.
IRDAI Chairman, T.S. Vijayan had earlier told Cafemutual on the sidelines of the FICCI event that open architecture model in insurance distribution may take time to pick up. He had said, “Due to lack of awareness about insurance marketing firm among distributors, it has not picked up well. We are working on this to remove the bottlenecks. In fact, we have started organizing awareness campaigns on IMF for distributors.”
Last year, in March, IRDAI had introduced a new distribution channel called IMF through which insurance distributors were allowed to tie up with multiple insurers to offer a wider choice to investors.
To start with, such distributors are allowed 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 a distribution business. Initially, the license is issued for three years which can 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.