A Comprehensive Guide to Register An Insurance Marketing Firm in India

Insurance Marketing Firm

The Insurance Regulatory and Development Authority of India (IRDA) within the purview of the IRDA Registration of Insurance Marketing Firm Act 2015 unveiled the concept of an Insurance Marketing Firm in India, that objectively solicits and procures insurance products, renders services, and distributes other financial products. The rise of insurance marketing firms in India stems from the thriving insurance sector and increasing demand for diverse insurance products across all demographics. Given the present scenario, leaping into such a business model can be both rewarding and challenging. Let’s see how one can start such a business in India alongside paperwork and norms.

Understanding the Role and Obligations of Insurance Marketing Firm

Insurance Marketing Firms are bound to operate within a strict IRDAI’s framework. As per governing legislation, these firms can leap into the following endevours.

1. Soliciting and Procuring Insurance Products: IMFs can promote and sell a wide range of insurance products, including term insurance, health insurance, and general insurance. However, they can only undergo a tie-up with two insurers to sell these products, meaning they can sell and promote two products from different companies simultaneously.
2. Insurance Servicing Activities: IMFs can cater to back-office operations, helping insurance companies cater to key tasks like survey and loss assessment work and employing licensed surveyors. They can also manage the customer insurance portfolio by serving the role of approved person for insurance repositories.
3. Marketing of Other Financial Products: Besides diverse insurance products, IMFs are eligible to distribute the following:

• SEBI-regulated mutual funds
• Pension products fall under the ambit of PFRDA.
• Banking and financial products of RBI-regulated lenders.
• Non-insurance products managed by the Department of Posts
• Any other financial product authorized by the IRDA

These activities, collectively, foster a robust service portfolio for IMFs, helping them stand out and grow in the thriving insurance sector.

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Requirements For Setting Up an Insurance Marketing Firm in India

Adhering to the given criteria is paramount to qualify as an insurance marketing firm.

1. Entity Type: Entities registered as LLPs, private limited companies, and co-operative societies stand eligible to apply for IMF registration. Firms that cannot apply for IMF registration include partnership firms and sole proprietorships.
2. Net Worth: At least Rs. 10 lakhs worth of net worth is paramount for starting an IMF in India. Net worth can be estimated as follows:

Net Worth = Paid-up share capital + reserves created via profits – accumulated losses and deferred expenditure.

• Name Requirements: Applicant firm must include phrase viz. “Insurance Marketing Firm” in their business name, reflecting the business nature clearly.
• Professional Indemnity Insurance: IMFs must secure and hold professional indemnity insurance as long as the IRDA registrations stay active. The firm must secure this insurance within one year of registration. Rs. 10 lakhs is the minimum sum insured value for such insurance.
• Principal Officer Qualifications: The IMF’s principal officer must ensure adherence to educational and professional standards, including;
  • The applicant must have undergone an associate/fellowship program with one of the following institutes:
    • Insurance Institute of India, Mumbai
    • Institute of Actuaries of India
    • Chartered Insurance Institute, London
  • Postgraduate degree from the Institute of Insurance and Risk Management, Hyderabad
  • Bachelor’s degree and a corporate experience of 5 years in the insurance sector.
• Training and Certification: The principal officer should have cleared 50 hours of training conducted by the recognized institution. Also, he/she must qualify for an examination conducted by a competent body.
• “Fit and Proper” Criteria: The principal officer must ensure adherence to standards concerning financial integrity, competence, and good character.
• Infrastructure: The firm must have adequate infrastructure and qualified staff to support the business operations.

Once these requirements are met, the applicant can apply for IMF registration. Upon receiving the documents, IRDAI shall initiate a thorough assessment and only after being satisfied, the authority will grant the certificate, which will stay valid for 3 years. The timely renewal of insurance marketing firms is paramount to avert strict penalties.

Steps Involved in Insurance Marketing Firm Registration

The registration process concerning insurance marketing firm registration is as follows:

Step 1: Application Submission: The applicant must visit the IRDAI portal for the application submission. Keep the paperwork intact and ready before heading to application filing. Pay close attention to the document part as any negligence could lead to rejection.

Step 2: Document vetting: IRDAI vets the documents, financial standing, business structure, and management qualifications for compliance and accuracy.

Step 3: Background Checks: IRDA shall perform a thorough vetting of the principal officer and their qualification within the purview of  “fit and proper” criteria.

Step 4: Approval: If the authority finds dossiers and the firm on point and is in adherence to underlying norms, the IRDA grants registration. If any issues arise, the applicant must resolve them before a stipulated deadline.

Validity and Renewal of Registration

The IMF license stays valid for as long as 3 years. The license must be renewed within 90 days before expiration or penalties shall arise. The renewal process involves updating mandatory documents, reaffirming financial stability, ensuring adherence to IRDA compliance, and filing the application.

FAQs

1. What is the role of an Insurance Marketing Firm?
An IMF serves as an intermediary that markets and distributes insurance products, assists clients with selecting policies, and offers additional insurance-related services and financial products.

2. How long does the registration process take?
The time frame depends on how promptly the IRDA processes applications and verifies documentation. Generally, the process may take a few weeks.

3. Can an IMF sell products from multiple insurance companies?
Yes, IMFs can partner with multiple insurers, with options to sell life, general, and health insurance from up to two insurers in each category.

4. What if an IMF doesn’t renew its license on time?
If the IMF fails to renew the license by the expiration date, it could face penalties, operational suspension, or may even need to reapply.

5. What are the marketing guidelines for IMFs?
IMFs must adhere to ethical practices, ensuring that their marketing materials are accurate, clear, and comply with IRDA guidelines.

Conclusion

Establishing an Insurance Marketing Firm is a big leap in the world of the insurance sector, which is remarkably growth-oriented as well as challenging. Once registered, IMF can delve into various activities, creating a business that is incredibly profitable and sustainable.

Keeping up with the compliances is the essence of this business model. Any non-conformity can lead to severe penalties, be it a matter of registration or meeting operational norms. That’s where a proficient and seasoned agency like Adviso comes it play. Adviso has been spearheading IRDAI’s regulations and approvals for years with the utmost knowledge and professionalism. Through unwavering support and excellent acumen, Adviso keeps the clients afloat by managing every aspect of registering or running the IMFs. If you are after hassle-free registration, Adviso’s support is something you can’t afford to miss.

Also Read: Insurance Company Registration: A Step-by-Step Beginner’s Guide