Where the agent acts as friend and guide

Sign here, please: Agents can handle documentation that requires handholding on account of complexity.   | Photo Credit: Getty Images/istock

We saw in the previous instalment of this column that there are many insurance distribution channels through which you can buy a policy, such as through agents, insurance brokers, marketing firms, corporate agents and web-aggregators.

You can also buy directly from the insurance company, usually on their website.

To recap, the best channel depends on the kind of policy you need and to know that, you have to do a bit of serious research. This is because insurance is definitely a product where one size does not fit all, and the same could be said of the sales channel you choose to buy insurance from. Let us take a look at various intermediaries starting with agents.

Agents are the ubiquitous insurance sales partners. They are the simplest intermediary to deal with, being individuals like us, and we all know one or more agents frequently, across generations in our families.

Agents are the sheet anchor of insurance distribution in India, especially life and non-life personal insurance such as health and motor. Their legal status is they represent one (and only one) insurance company and are authorised to sell its products, service the sales and maintenance of the policy as well as assist in claims.

In India, insurance companies can sell only one category of insurance — either life or non-life policies. Some are set up to sell only one type of non-life policy such as health insurance. So, a person can have the agency of one life insurance company, one non-life insurance company and one standalone health insurance company without conflict.

We do find individuals who are able to offer you products of more than one company through agencies in the names of family members.

The agent is selected, licensed and trained by the insurer according to norms laid out by the Insurance Regulatory and Development Authority of India (IRDAI) from time to time. At the basic level, they would be trained about insurance concepts, products of the specific insurance company and sales techniques. But, a good agent would be able to carry out an intelligent need analysis and suggest suitable products and can even be a trusted financial adviser for the family — across generations, as mentioned earlier.

Code of conduct

The agent is bound by the code of conduct of his profession that specifies, among other things, that he has to recommend products according to the needs of the prospective buyer and has strict norms to prevent mis-selling or selling of policies through misinformation or misrepresentation of facts.

Having said that, his actions are binding on the company according to even a simple reading of the laws relating to agency. So, the customer is protected.

When it comes to claims, agents still play an end-to-end role in life insurance claims. Documentation, which can be mystifying and highly specific, requires handholding; especially at a time of family grief, agents and companies are geared up to deal with it.

Motor claims, too, are aided by agents, but when it comes to health insurance, an entity called Third Party Administrators — health services (TPAs) have been in the picture for over a couple of decades, and they are the claims-settling partner of the insurance company where you have your health policy.

(The writer is a business journalist specialising in insurance and corporate history)

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Printable version | Jun 21, 2021 7:35:28 PM |

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