Insurance regulator IRDAI has notified changes to regulations governing insurance marketing firms (IMFs). The amendments to the regulations notified in 2015 have been introduced from a perspective of increasing insurance penetration by providing an enabling environment. The regulator had also constituted a committee that made many recommendations, including a reduction in the net worth, expansion of the area of operation of IMFs, as well as the basket of products.
As per the new regulations, notified on July 24, for IMFs applying to launch operations in only one district, which is an aspirational district as defined by NITI Aayog or an economically backward district, a net worth of ₹5 lakh would suffice. The net worth would continue to be a minimum of ₹10 lakh for all other cases. The committee had pointed out that the ₹10 lakh norm was high for tier-II and III cities.An IMF is allowed to register for three districts in a State, with at least one of them being aspirational district.
Another amendment permits the IMFs to engage with Agriculture Insurance Company of India and Export Credit Guarantee Corporation. This would be in addition to existing norms allowing them to solicit business for two life, two general and two health insurers.On the products allowed for IMF, the regulations said they can solicit business for all kinds of products sold on individual and/or retail basis, including crop insurance for non-loanee farmers and combi products. Property, group personal accident, group health, GSLI and term insurance policies for Micro, Small and Medium Enterprises (MSME) form part of this list.
Other changes include a relaxation in the work experience requirement of IMF’s Principal Officer. A new clause requiring the insurers to file with authority their policies for utilisation of IMFs, has also been introduced.
