The Insurance Regulatory and Development Authority of India (IRDAI) has recently allowed corporate agents and insurance marketing firms (IMFs) to increase their tie-up limits to nine and six insurers each for life, general and health insurers. Earlier, corporate agents and IMFs were permitted to correspondingly tie up with only 3 and 2 insurers.
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In other words, this means that banks, which work as corporate agents of insurance companies, can now sell up to 9 policies. IMFs, on the other hand, can do the same for six policies.
Corporate entities represent an insurance company and sell its policies. Usually, they are engaged in a particular business and sell insurance policies to their existing customers based on the situation. IMF is also a distribution channel in insurance.
How will the move impact insurance firms?
This move is directed towards increasing insurance penetration in the country.
Venkatesh Naidu, CEO of Bajaj Capital Insurance Broking Ltd, believes that this will give banks further flexibility to offer solutions to the clients and open up opportunities for the insurance industry to have more tie-ups.
According to Sumit Rai, MD & CEO at Edelweiss Tokio Life Insurance, the move will encourage growth in the industry and increase insurance penetration in the country.
"IRDAl has propelled the industry towards a new era of customer-centricity and financial inclusion. Overall, these are welcome changes that will be instrumental in creating sustainable, long-term industry growth, aligned with the regulator’s vision of insurance for all," Rai said.
Also, this will blur the gap between brokers and corporate agents. Brokers have a stated responsibility of serving the interests of its customers as they represent them, whereas CAs and IMFs represent the insurance companies primarily.
How will the move impact policyholders?
Prasun Sidkar, MD & CEO, ManipalCigna Health Insurance assumes that this initiative will create the bedrock for a new era in the insurance industry.
"For policyholders, this will improve access to insurance and facilitate the reach of insurance to the last mile. These path breaking measures will encourage innovation in the insurance sector, strengthen the distribution model and certainly make the sector more attractive for investment," he said.
Now, policyholders will have a wider choice of opting for innovative products offered by insurers.
This would further aid in the government and IRDAI's vision of accelerating insurance penetration in the country.
Will it have any negative consequence?
Naidu thinks that unless regulated and monitored this move could lead to client interests being negatively impacted.
“Skill and knowledge in the area of products is still lacking in smaller players which may negatively affect customer interests,” he said.
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