IRDA Insurance Marketing Firm

Updated on May 30, 2024 01:46:22 PM

The IRDA has allowed for the registration of insurance marketing firms so that entrepreneurs and insurance agents can start their own insurance distribution company. As per the Registration of Insurance Marketing Firm Regulations, 2015, an “Insurance Marketing Firm” is defined as an entity registered by the IRDA to solicit or procure insurance products, to undertake insurance service activities and to distribute other financial products.

How to Start an Insurance Marketing Firm

The Insurance Regulatory and Development Authority of India (IRDA) through the IRDA Registration of Insurance Marketing Firm Act 2015 has introduced the concept of “Insurance Marketing Firm” in India. Insurance Marketing Firms are an entity registered in India that are allowed to solicit or procure insurance products, to undertake insurance services and to distribute other financial products. With the Government of India raising the FDI in insurance, the insurance industry is set to witness robust growth in the coming years and there exists tremendous potential for those starting an insurance marketing firm. In this article, we look at the procedure for starting an insurance marketing firm in India.

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Activities of an IRDA Insurance Marketing Firm

An Insurance Marketing Firm will be allowed to perform the following functions as per the Act:

Solicit and procure Insurance Products: Solicitor procures insurance products of two Life, two General and two Health Insurance companies at any point in time. In respect of general insurance, the Insurance Marketing Firm would be allowed to solicit or procure only retail lines of insurance products as given in the file & use guidelines namely motor, health, personal accident, householders, shopkeepers and such other insurance products approved by the IRDA from time to time.

Provide Insurance Servicing Activities:

  • Undertake back-office activities of insurers as allowed in the Guidelines on Outsourcing Activities by Insurance Companies issued by the IRDA;
  • Become an approved person of Insurance Repositories;
  • Undertake survey and loss assessment work by employing on their rolls licensed surveyor & loss assessors;
  • Perform any other insurance-related activity permitted by the IRDA from time to time.

Marketing of other financial products, namely:

  • Mutual funds of mutual fund companies regulated by SEBI;
  • Pension products regulated by PFRDA;
  • Other financial products distributed by SEBI licensed Investment Advisors;
  • Banking/ financial products of banks/ NBFC regulated by RBI;
  • Non-insurance products offered by Department of Posts, Government of India;
  • Any other financial product or activity permitted by the IRDA from time to time.

Requirement for Obtaining Insurance Marketing Firm Registration

To obtain IRDA registration for an Insurance Marketing Firm, the following eligibility criteria must be fulfilled:

The following types of entity can apply for the IRDA Insurance Marketing Firm registration:

  • A private limited company
  • A Limited Liability Partnership (LLP)
  • Co-operative Societies registered under the Co-operative Societies Act, 1912
  • The IRDA recognizes any other person to act as an Insurance Marketing Firm.

Note: Since the act doesn’t expressly mention Partnership Firm or Proprietorship, it is best to start a private limited company or LLP.

Have a net worth (as per Companies Act, 2013) of not less than Rs.10 lakhs: Companies Act, 2013 defines net worth as “the aggregate value of the paid-up share capital and all reserves created out of the profits and securities premium account, after deducting the aggregate value of the accumulated losses, deferred expenditure and miscellaneous expenditure not written off, as per the audited balance sheet, but does not include reserves created out of revaluation of assets, write-back of depreciation and amalgamation”.

The entity Private Limited Company or LLP must have in its name the words “Insurance Marketing Firm”: Due care must be taken to ensure the word “Insurance Marketing Firm” is a part of the name of the entity.

Take out and maintain at all times a professional indemnity insurance cover throughout the validity of the period of the Insurance Marketing Firm registration granted by the IRDA: Newly registered insurance marketing firm must produce a policy within twelve months from the date of issue of original registration and with a minimum sum insured of Rs 10 lakhs.

The principal officer of the Insurance Marketing Firm must satisfy one of the following eligibility criteria:

  • Be an Associate/Fellow of the Insurance Institute of India, Mumbai; or
  • Be an Associate/Fellow of the Institute of Actuaries of India; or
  • Bean Associate/Fellow of Chartered Insurance Institute, London; or
  • Be a Postgraduate qualification of the Institute of Insurance and Risk Management, Hyderabad; or
  • Be a Graduate with Insurance experience of five years preceding the year in which the application is made; or
  • Be a Graduate with 10 years of experience in the financial services sector preceding the year in which the application is made.

The principal officer of the Insurance Marketing Firm must satisfy the following training, examination and certification criteria: The Principal Officer shall undergo Fifty Hours of Insurance Marketing Firm training from an institution recognised by the Authority, and should pass an examination, at the end of the period of training, conducted by the Examination Body recognised by the Authority.

Principal Officer of the Insurance Marketing Firm must be considered as a ‘fit and proper person’. To be considered a “fit and proper person”, the following criteria would be considered:

  • Financial integrity;
  • Absence of convictions or civil liabilities;
  • Competence;
  • Good reputation and character;
  • Efficiency and honesty; and
  • Absence of any disqualification to act as an intermediary as stipulated in the Act, as amended from time to time.

Upon satisfying the above eligibility criteria, the applicant can make an application to the IRDA in the given format for registration as an Insurance Marketing Firm. The applicant would provide registration as “Insurance Marketing Firm” if the IRDA satisfies with the application. The registration for Insurance Marketing Firm issued by the IRDA would be valid for a period of three years from the date of its issue.

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FAQs

What is a No Objection Certificate (NOC)?

No Objection Certificate (NOC) is a certificate issued to an IMF applicant by the Authority on request. The NOC is issued for the sole purpose of enabling the IMF applicant to apply for incorporation of the proposed IMF Firm Name (which must necessarily include the words “Insurance Marketing / IMF”) with Registrar of Companies (ROC). The NOC is valid up to six months from the date of issue.

How to apply for NOC?

  • Go to "New User? Register Now!" on the home page of the IMF portal and click on "Do You Need NOC? Click Here".
  • Fill in the relevant details, i.e.,
    • Name of the Proposed Company * o Address of the Proposed Registered Office
    • Address of Correspondence
    • Email
    • Details and Jurisdiction of ROC
    • PAN
  • Upload the relevant documents, i.e., o Scanned copy of PAN card of proposed directors/partners o Scanned copy of Aadhaar of proposed directors/partners o Scanned copy of Address Proof of the given Address of Correspondence ? Click on ‘Submit’.
  • Name of the Proposed Company
    • must include the word(s) “IMF / Insurance Marketing” o must specify if it is Pvt. Ltd., OPC, LLP, etc.
    • must not be similar to that of any Insurer Broker
    • must not be an undesirable name as defined in Companies(Incorporation) Rules.
    How to enquire the status of an NOC application?
    • Go to "New User? Register Now!" on the home page of the IMF portal and click on "Check NOC Status? Click Here”.
    • Key in the NOC application reference number and the PAN number given in the application and click on “Submit”.
    Is it mandatory for the applicant to make a Personal Presentation at IRDAI?

    No. The Authority may opt to conduct a Telephonic Interview instead of a Personal Presentation.

    What is the validity period of Registration of the Insurance Marketing Firm?

    An IMF Registration issued by the Authority is valid for a period of three years from the date of its issue, unless it is suspended or cancelled by the Authority.

    What is the Capital requirement for an Insurance Marketing Firm?

    The applicant shall have net worth of:

    • Not less than five lakh rupees, if the applicant is opting for only one district, which is an aspirational district.
    • Not less than ten lakh rupees for all other cases.

    The applicant shall ensure that the net worth is maintained at all times and the IMF shall submit a certificate duly certified by a chartered accountant to this effect annually within three months from the close of the financial year.

    What is meant by ‘Area of Operation’?

    The "Area" is defined as the district for which the registration of the Insurance Marketing Firm is valid. Maximum of three districts within a State are allowed for registration/renewal. If an applicant is opting for more than one district, then at least one of the districts shall be an aspirational district as per the list published by NITI Aayog, Government of India.

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