Insurance Regulatory and Development Authority of India (IRDAI) has constituted ten-member committee in June 2018 to look into regulations on Insurance Marketing Firms (IMFs). The committee has recommended for relaxing norms for insurance agent to insurance service provider switch and if the recommendations of a committee are considered, the individuals could soon be allowed to shift from being insurance agents to insurance service providers (ISP).
The committee has said that the practice of paying Rs 5,000 as fixed salary to ISPs should continue. It also said that an insurance agent is tied to and works for one company only and can sell only that firm's products. On the other hand, an ISP can through the IMF tie-up with two life, two general and two standalone health insurers. ISPs get a fixed remuneration while agents receive commissions for the products sold. Besides, it suggested that in case of migration from an agent to ISP, the continuation of renewal commission/benefits post-surrender of the individual agency will be as per the board approved policy of the insurance companies. Individual insurance agents don’t earn a fixed remuneration whereas ISPs do.
The committee report further said that presently, it is difficult to convince any individual agent who is an eligible candidate to be an ISP of an IMF, since that entails him to surrender his individual agency licence. It also said that this will result in the individual losing his/her renewal commission as per the present practice of the insurance companies.