Insurance Marketing Firm

The Insurance Industry of India is very attractive in terms of return on investment and the market is yet to explore widely subject to demographic statistics of the Country. Overall Investment Hub of the globe is now been shifting to India. The insurance industry is also very promising to adore foreign Investment and domestic too, precisely the Government has increased the limit of foreign investment on Insurance companies and its Intermediary services. Insurance Marketing Firm is also one best segments of the Insurance Industry in India.

What is Insurance Marketing Firm?

It is an entity registered by the authority to solicit or procure insurance products, undertake insurance service activities, and distribute other financial products by employing individuals licensed to market, distribute and service such other financial products.

Who can apply for this Registration?

As per the provision of Insurance Regulatory and Development Authority of India (Registration of Insurance Marketing Firm) Regulations, 2015 Company formed under Companies Act, 2013, Limited Liability Partnership formed under the Limited Liability Partnership Act, 2008 or Co-operative Societies registered under Co-operative Societies Act, 1912 can apply for this registration. Collectively they are called Applicant and the other criteria set up in the Regulation need to be fulfilled by such entity so that Registration from Authority can be received.

Important Terminology:

• Aspirational District: It is a focused district designated by NITI Aayog, Government of India. It can be understood as an economically backward district. 
• Principal Officer: Director or partner or any officer approved by authority to exclusively carry out the functions of Insurance Marketing Firm and who possesses the requisite qualification and practical training and who has passed the examination as prescribed.

Qualification of Principal Officer:

The Qualification of a Principal Officer is divided into two aspects i.e. Academic and Training

Academic Qualification

• Member of Insurance Institute of India, Mumbai or Institute of Actuaries of India, Charter Institute of India or ICAI or ICSI or ICWAI
• Post Graduate from Institute of Insurance and Risk Management, Hyderabad or
• Graduation with Insurance experience of Two Years or 
• Graduation with Five Years’ experience in the financial services sector or
• Master in Business Administration

Training

25 hours of training and pass the examination for the qualification of Principal Officer from Insurance Institute of India, Institute of Actuaries of India, Chartered Insurance Institute of London, or Post Graduate from Institute of Insurance and Risk Management, Hyderabad.

Other than the above qualification Principal Officer, needs to take 50 hours of Insurance Marketing Firm Training from an institution recognized by authority and should pass an examination.

Insurance Sales Person: It is the title given to an individual employed by Insurance Marketing Firm to solicit or procure insurance products. 

Qualification and Certification of Insurance Sales Person (ISP).

ISP as per academic qualification should pass the +12 examination from a recognized Board/Institution.

ISP should be resident in the area of Registration of Insurance Marketing Firm.

They should take 50 hours of training and pass the examination to be qualified as Insurance Sales Person.

Financial Service Executive: It is a designation given to individuals employed by Insurance Marketing Firm and holding valid licenses issued by respective financial regulators, other than the authority.

Scope of Business:

Insurance Marketing Firm shall engage an Insurance Sales Person for the purpose of soliciting and procuring insurance products of a maximum of two life insurers, two general insurers and two health insurers at any point of time. Further in addition two general insurer, it can engage with Agriculture Insurance Company of India Limited and Export Credit Guarantee Corporation Limited. In addition to this, the financial products of mutual fund, pension products, banking and financial products etc. can be sale via Insurance Marketing Firm. These are collectively termed as Scope of Business of Insurance Marketing Firm.

Eligible entity i.e. applicant should file Form A along with required documents accompanied by non-refundable application fees of INR 5,000/-. Once entity is formed with the name reflecting the activity of the Insurance Marketing Firm, then the required capital needs to be infused and preparation of documents/information etc. so that the application can be placed with Authority. Authority once examined the entire documents and information then will provide a decision on whether to registration be granted or not.

Pre-requisite before filing an Application:

Applicant as per eligibility criteria first should get approved name from authority vide an application to Authority then after the entity can be formed in Registrar of Companies though its Corporate or Limited Liability Partnership.

Principal Officer and Insurance Sales Person should possess the qualification and certification of approved institution. 

Capital Adequacy is met.

Director/partners, Principal Officer are qualified under the Fit and Proper Criteria of Insurance Act, 1938.

Applicant should place word like “IMF” or Insurance Marketing Firm in its name reflecting the desired activities in its Memorandum of Association or Partnership Deed.

The required infrastructure like adequate office space, equipment or trained manpower to effectively discharge its activities.

Capital Adequacy:

The applicant shall have net worth of not less than INR 5,00,000/- if the applicant is opting for only one district which is an aspirational district. For other cases, the minimum requirement of net worth is INR 10, 00,000/-. The sum equal to paid-up capital and free reserves are termed as Net Worth in layman's terms.

Validity of Registration:

The registration is valid for a period of 3 years from the date of issue unless it is suspended or canceled by the authority or surrendered by the Insurance Marketing Firm.

Therefore registered entity is required to apply for renewal within 30 days before the existing license expires in Form AA along with required documents in addition to the renewal of Fees of INR 2,000/-. 

Principal Officer and Insurance Sales Person of the Insurance Marketing Firm before seeking renewal of registration shall have completed at least 25 hours of theoretical and practical training, imparted by an institution recognized by the authority.

Duration:

Tentatively it can take time around 3 months minimum moment the applicant place the application form without any error as per application filing guidelines. Further, in case of incomplete or not at par, then the authority return the application. Precisely it is understood that the applicant application, information and documents are most to be in order with proper page numbered in addition to true and correct of documents and information supplied thereon. After this, the authority will scrutinize the documents and share the questionnaire as per their need of clarification and upon satisfaction of their regulatory norms, guidelines and prescription the authority issued the Certificate of Authorization, where end to end process takes the time around 3 month

• Organization Structure with chart of responsibilities
• Certificate of Incorporation, Memorandum of Association and Article of Association of Company or Deed and Incorporation certificate in case of LLP
• PAN Card 
• Board Resolution
• KYC of Director/Partner and Shareholder or Principal Officer
• Academic Qualification and Experience Certificate of Principal Officer and/or Insurance Sale Person
• Place of Business Proof
• Shareholding Pattern of Company/LLP
• Name and Activities of Associate Concern
• Name and address of Principal Banker and Statutory Auditor
• Business for at least 3 years
• Infrastructure commitment like office space, equipment and manpower available with applicant.
• Name of Insurance Companies with whom applicant is proposing to work with along with consent letter
• Net Worth certificate from Statutory Auditor
• Audited financial statement of last three years or in case of newly incorporated then unaudited financial statement of company/LLP
• Undertaking and Declaration
• Certification of examination clear of Principal Officer and Insurance Sales Person

Statistically

Across the India, to serve the population of around 135 Crore via 24 life insurance company and 35 non-life insurance including only one available reinsurance company of country, exactly 390 insurance marketing firm are registered as per the data published by IRDAI on its website. But effectively the active insurance marketing firm is far less than reported, precisely as per the data it is observed around 17 Insurance Marketing Firm is canceled and 83 Insurance Marketing Firm authorization is expired. Though it’s not good to cancel or expire are still counted on the total number of Insurance Marketing Firm available in India but the data published IRDAI covers this license also. Therefore 290 firms are actively working as Insurance Marketing Firm to solicit and serve the tie-up insurance products.