Omission of Section 44 relating to prohibition of cessation of payments of commission.

Omission of Section 44 relating to prohibition of cessation of payments of commission.

27. Clause 57: Omission of Section 44 relating to prohibition of cessation of payments of commission. 27.1 Clause 57 of the Bill seeking to omit Section 44 of the Act relating to prohibition of cessation of payments of commission to agents states as under: ―
Section 44 of the Insurance Act shall be omitted.‖ 27.2 Provisions of Section 44 of the existing Act, read as below: ―(1) Notwithstanding anything to the contrary contained in any contract between any person and an insurance agent, providing for the forfeiture or stoppage of payment of renewal commission to such insurance agent no such person shall, in respect of life insurance business transacted in India, refuse payment to an insurance agent of commission due to him on renewal premium under the agreement by reason only of the termination of his agreement, except for fraud: Provided that—

(a) such agent ceases to act for the insurer concerned after the Central Government has notified in the Official Gazette that it is satisfied that the circumstances in which the said insurer is placed are such as to justify the agent's ceasing to act for him; or

(b) such agent has served the insurer continually and exclusively in respect of life insurance business for at least five years and policies assuring a total sum of not less than fifty thousand rupees effected through him for the insurer were in force on a date one year before his ceasing to act as such agent for the insurer, and that the commission on renewal premiums due to him does not exceed four per cent. in any case; or

 (c) such agent has served the insurer continually and exclusively for at least ten years and after his ceasing to act as such agent he does not directly or indirectly solicit or procure insurance business for any other person.

(b) Explanation.— For the purposes of this sub-section, service of an insurance agent under a chief agent of the insurer, whether before or after the commencement of the Insurance (Amendment) Act, 1950, shall be deemed to be service under the insurer.

 (2) Any commission payable to an insurance agent, under the provisions of clauses (b) and (c) of the proviso to sub-section (1) shall, notwithstanding the death of the agent, continue to be 164 payable to his heirs for so long as such commission would have been payable had such insurance agent been alive. 44A. For the purposes of ensuring compliance with the provisions of sections 40A, 40B, 40C, 42B and 42C the Authority may by notice— (a) require from an insurer, principal agent, chief agent or special agent such information, certified if so required by an auditor or actuary, as he may consider necessary; (b) require an insurer, principal agent, chief agent or special agent to submit for his examination at the principal place of business of the insurer in India any book of account, register or other document, or to supply any statement which may be specified in the notice; (c) examine any officer of an insurer or a principal agent, chief agent or special agent on oath, in relation to any such information, book, register, document or statement and administer the oath accordingly, and an insurer, principal agent, chief agent or special agent shall comply with any such requirement within such time as may be specified in the notice.‖ 27.3

           The suggestions made by Life Insurance Agents Federation of India, National Federation of Insurance Field Workers of India as also an expert, on the omission of section 44, as proposed, are stated as below: “Section 44 was introduced in the Insurance Act, 1938: (i) 44 (1), apparently to protect the Agent from loosing his earned but deferred income and inserting subsections (a) ,(b) and (c) to protect the Insurers from the liability of payment of renewal commission not before the latent period of 5 years. (ii) 44(2), apparently to protect the heirs of the Agent from loosing their rights to the renewal commission. The reminiscence of the deletion of this Sec 44 shall be felt by the country in the year 2020-25, when we are destined to be the 3rd growing economy behind USA and CHINA. The economic prosperity shall come with its own problems of intra mismatch, big population, high unemployment etc. We shall be a Democratic country of 150 crore people of which about 50 crore shall be in the impatient age group of 20-30 and seeking for employment. We advocate for the Insurance Agency as a whole time career and as a respectable source of employment, provided the profession gets protection by such Sections as Sec 44 and the Govt takes other measures towards professionalizing the Agency Career (for which we have a separate panel of people working on the scheme).

         We strongly request you to stop the omission of the Sec 44 of the Insurance Act 1938 and scrap the Clause 57 of the Insurance Laws Amendment Bill, 2008.”165 (iii) There is a proposal to omit this Section. This omission of Section 44 of Insurance Act will deprive the agents of their hard earned commissions. This will encourage companies to even withhold commissions by terminating the agents on flimsy grounds. This was the style of functioning of many companies prior to Nationalisation. This will lead to exploitation of work force who have to work on commissions after spending and ensuring productivity. In order to protect the Insurers interest it can be added that if an Agent joins another Insurer then the Renewal commissions can be stopped. Based upon a few decades of experience, Section 44 was introduced in 1950 as a measure to give partial protection to the renewal commission of agents. It is now proposed to drop this Section, based on just two years‘ experience. There does not appear to be any logic behind this step which would only show the IRDA, in poor light. The Regulator has not only to be strictly impartial between different sections of the industry, but should also appear to be so. This move, to withdraw the protection provided to agents, is sure to affect the image of impartiality.

           Another aspect has also to be noted. The number of agents just dropping out is many times greater than the number of agents moving from one company to another. If the companies, which complain about their agents being lured away by rival companies, take proper action to prevent drop out of agents, there would be no need to worry about a few agents moving to rival companies. The problem of ‗agency drop out is to be tackled by the IRDA, with the cooperation of all companies, not by amending the insurance Act. With the Bill seeking to omit the entire section, the protection given to the family of the deceased agent, in the form of hereditary commission, also gets removed. So the proposed amendment is not only unfair, but will not also stand the test of law.

(THANK YOU MR. VINAY MOHANTHY)

POSTED BY 

SECRETARY, LIAFI,COIMBATORE DIVISION.

LIAFI LEADERS MET LIC OFFICIALS 0N 24/03/2015. RESULT

Dear LIAFIANS,

MESSAGE RECEIVED FROM OUR NATIONAL PRESIDENT MR. D.S.SHUKLA
FOR YOUR INFORMATION.

"After our discussion assurance given by management on these issues 

1. second housing loan

2. group insurance up to 10 lakhs

3. ID card given to all agents

4. computer allowance to ZM club agents

5. review of mediclaime

6. review of number of lifes to club members

but result awaited"

BY

D.S. SHUKLA,LIAFI PRESIDENT.

POSTED BY SECRETARY,LIAFI,COIMBATORE DIVISION.

AGITATION PROGRAM-LIAFI DISCUSSION WITH MANAGEMENT ON 24/03/2015

REVIEW OF ESCALATION CLAUSE

POSTED ON 22/03/2015 BY SECRETARY,LIAFI,COIMBATORE.

GUIDELINES ON APPOINTMENT OF INSURANCE AGENTS, 2015

Ref: IRDA/AGTS/CIR/GLD/046/03/2015 Date: 17-03-2015
GUIDELINES ON APPOINTMENT OF INSURANCE AGENTS, 2015
In view of the promulgation of the Insurance Laws (Amendment) Ordinance, 2014 inter alia amending Section 42 of the insurance Act, 1938, relating to appointment of Insurance Agents, it has been decided to issue the following Guidelines in exercise of powers under section 42 of the Insurance Act, 1938 read with section 14 (2) (a) & (c) of the IRDA Act, 1999. I. Short title and commencement.
1) These guidelines shall be called “Guidelines on Appointment of Insurance Agents, 2015. 2) These guidelines shall come into force with effect from 1st April, 2015 and valid till the Regulations in this regard are issued. II. Definitions: In these Guidelines, unless the context otherwise requires:- 1) “Act” means the Insurance Act1938 (4 of 1938) as amended from time to time
2) “Appointment Letter” means a letter of appointment issued by an insurer to any person to act as an insurance agent
3) “Appellate Officer”means an officer authorised by the Insurer to consider and dispose representations and appeals received from an Insurance Agent.
4) "Insurance Agent" means an individual appointed by an insurer for the purpose of soliciting or procuring insurance business including business relating to the continuance, renewal or revival of policies of insurance;
5) “Authority” means the Insurance Regulatory and Development Authority of India established under the provisions of Section 3 of the Insurance Regulatory and Development Authority Act, 1999 (41 of 1999);
6) “Composite Insurance Agent” means an individual who is appointed as an insurance agent by two or more insurers subject to the condition that he/she shall not act as insurance agent for more than one life insurer, one general insurer, one health insurer and one of each of the mono-line insurers.
7) “Centralised list of Agents” means a list of agents maintained by the Authority, which contains all details of agents appointed by all insurers
8) “Centralised list of black listed agents” means list of agents maintained by the Authority whose appointment is cancelled/suspended by a designated official of insurer on grounds of violation of code of conduct and / or fraud.
9) “Designated Official” means an officer authorised by the Insurer to make Appointment of an individual as an Insurance Agent.
10) “Examination Body” means an Institution, which conducts prerecruitment tests for insurance agents and which is duly recognised by the Authority;

11) “Multilevel Marketing Scheme” means any scheme as defined in explanation to Section 42 (A) of the Insurance Act 1938 as amended from time to time
III. All words and expressions used herein and not defined but defined in the Insurance Act 1938, or in the Insurance Regulatory and Development Authority Act, 1999 (41 of 1999), or any other rules and regulations made there under shall have the meanings respectively assigned to them in those Acts, Rules and Regulations.
IV. Appointment of Insurance Agent by the Insurer:
1) An applicant seeking appointment as an Insurance Agent of an Insurer shall submit an application in Form I-A to the Designated Official of the Insurer
2) The Designated Official of the insurer, on receipt of the application, shall satisfy himself that the applicant:-
a) has furnished the Agency Application in Form I-A complete in all respects;
b) has submitted the PAN details along with the Agency Application Form;
c) has passed the insurance examination as specified under Clause VI;
d) does not suffer from any of the disqualifications mentioned in Clause VII
e) has the requisite knowledge to solicit and procure insurance business; and capable of providing the necessary service to the policyholders;
3) The Designated Official shall exercise due diligence in verifying the agency application and ascertaining that the applicant does not hold agency appointment for more than one life insurer, one general insurer, one health insurer and one of each of the mono-line insurers and is not in the centralised list of blacklisted agents.
4) The Designated Official shall also verify
a) The centralised list of agents maintained by the Authority with the PAN Number of the applicant to ascertain the information as in sub clause (3) above.
b) The centralised list of black listed agents maintained by the Authority to ascertain that the applicant is not black listed.
5) The Designated Official on satisfying himself that the applicant has complied with all the conditions mentioned in Clause IV (2) to IV (4) above, and also does not suffer from any of the disqualifications mentioned in sub-section (3) of Section 42 of the Act, may process the agency application and if found fit and proper, grant appointment to the applicant as an insurance agent by issuing an appointment letter within 15 days of receipt of all documents from the applicant. The Designated Official shall allot an agency code number to the appointed agent and the agency code number shall be prefixed by the abbreviation of the insurer’s name.
6) The agency appointment letter issued as mentioned in subclause (5) above shall lay down the terms of appointment covering all conditions governing appointment and functioning of the applicant as insurance agent and the code of conduct as outlined in Clause VIII. The letter of appointment shall be dispatched not later than 7 days after the appointment of the agent as mentioned in sub-clause (5) above.
7) The applicant so appointed as an insurance agent shall be provided an identity card, by the insurer which shall identify the agent with the insurer of which he/she is acting as an agent.
8) The Designated Official shall enter and update the Agency Data of the applicant appointed as an Insurance agent in the Agency Portal maintained by the Authority through online mode immediately after the appointment of the agent. The online up-dation of Agency database records by the insurer is to maintain the updated centralised list of agents maintained by the Authority. The Designated Official shall be responsible to ensure that the centralized list of agent’s is up to date and accurate.
9) The Designated Official may refuse to grant Agency Appointment to any applicant if the applicant does not fulfil any of the conditions mentioned in these Guidelines. The Designated Official shall communicate the reasons for refusal for appointment as agent to the application writing in, within 21 days of receipt of the application.
10) An applicant who is aggrieved by the decision of the Designated Official refusing to grant the agency appointment may submit a review application to the appellate officer of the insurer for review of the decision. The insurer shall designate an Appellate Officer to consider the review application of the applicant. The Appellate Officer shall consider the application and communicate the final decision in writing within 15 days of receipt of the review application.
V. Appointment of Composite Insurance Agent by the insurer:
1) An applicant seeking appointment as a ‘Composite Insurance Agent’ shall make separate application to the Designated Official of respective life, general, health insurer or mono line insurer as the case may be, in the ‘Composite Agency Application Form I-B. The Designated Official of the respective insurers shall deal with the application in the manner and procedure outlined in Clause IV.
VI. Insurance Agency Examination. —
1) An applicant shall pass in the Insurance Agency Examination conducted by the Examination Body in the subjects of Life, General, Health Insurance as the case may be, as per the syllabus prescribed by the Authority to be eligible for appointment as an insurance agent. The insurer shall provide the necessary assistance and guidance to the candidates to equip them with adequate insurance knowledge required to qualify in the agency examination.
2) The applicant who has successfully passed the Insurance Agency Examination as mentioned in (1) above shall be issued a pass certificate by the Examination body. The pass certificate issued by the Examining body shall be in force for a period of twelve months, for the purpose of seeking appointment as an agent with any insurer for the first time.
3) Only candidates who have qualified in the Insurance Agency Examination as mentioned above and who hold a valid pass certificate issued by the Examination Body shall be eligible to be considered for appointment as agents. VII. Disqualification to act as an Insurance Agent: The conditions for disqualification shall be as stipulated under Section 42 (3) of the Act.
VIII. Code of Conduct.
1) Every agent, shall adhere to the code of conduct specified below:-
a) Every insurance agent shall,---
 i) identify himself and the insurer of whom he is an insurance agent;
ii) show the agency identity card to the prospect, and also disclose the agency appointment letter to the prospect on demand;
iii) disseminate the requisite information in respect of insurance products offered for sale by his insurer and take into account the needs of the prospect while recommending a specific insurance plan;
iv) where the Insurance agent represents more than one insurer offering same line of products, he should dispassionately advice the policyholder on the products of all Insurers whom he is representing and the product best suited to the specific needs of the prospect.
 v) disclose the scales of commission in respect of the insurance product offered for sale, if asked by the prospect;
v) indicate the premium to be charged by the insurer for the insurance product offered for sale;
vi) explain to the prospect the nature of information required in the proposal form by the insurer, and also the importance of disclosure of material information in the purchase of an insurance contract;
vii) bring to the notice of the insurer every fact about the prospect relevant to insurance underwriting, including any adverse habits or income inconsistency of the prospect, within the knowledge of the agent, in the form of a report called “Insurance Agent’s Confidential Report” along with every proposal submitted to the insurer wherever applicable, and any material fact that may adversely affect the underwriting decision of the insurer as regards acceptance of the proposal, by making all reasonable enquiries about the prospect;
viii) obtain the requisite documents at the time of filing the proposal form with the insurer; and other documents subsequently asked for by the insurer for completion of the proposal;
ix) advise every prospect to effect nomination under the policy
x) inform promptly the prospect about the acceptance or rejection of the proposal by the insurer;
xi) render necessary assistance and advice to every policyholder on all policy servicing matters including assignment of policy, change of address or exercise of options under the policy or any other policy service, wherever necessary;
xii) render necessary assistance to the policyholders or claimants or beneficiaries in complying with the requirements for settlement of claims by the insurer;
2) No insurance agent shall,----
a) solicit or procure insurance business without being appointed to act as such by the insurer
b) induce the prospect to omit any material information in the proposal form;
c) induce the prospect to submit wrong information in the proposal form or documents submitted to the insurer for acceptance of the proposal;
d) resort to multilevel marketing for soliciting and procuring insurance policies and/or induct any prospect/policyholder to join a multilevel level marketing scheme.
e) behave in a discourteous manner with the prospect;
 f) interfere with any proposal introduced by any other insurance agent;
g) offer different rates, advantages, terms and conditions other than those offered by his insurer;
h) demand or receive a share of proceeds from the beneficiary under an insurance contract;
i) force a policyholder to terminate the existing policy and to effect a new policy from him within three years from the date of such termination of the earlier policy;
j) apply for fresh agency appointment to act as an insurance agent, if his agency appointment was earlier cancelled by the designated official, and a period of five years has elapsed from the date of such cancellation;
k) become or remain a director of any insurer;
3) Every insurance agent shall, with a view to conserve the insurance business already procured through him, make every attempt to ensure remittance of the premiums by the policyholders within the stipulated time, by giving notice to the policyholder orally and in writing;
4) Any person who acts as an insurance agent in contravention of the provisions of this Act shall be liable to a penalty which may extend to ten thousand rupees and any insurer or any person acting on behalf of an insurer, who appoints any person as an insurance agent not permitted to act as such or transact any insurance business in India through any such person shall be liable to penalty which may extend to one crore rupees.
5) The insurer shall be responsible for all acts and omissions of its agents including violation of code of conduct specified under these guidelines, and shall be liable to a penalty which may extend to one crore rupees.
IX. Authority’s right to inspect:
1) The Authority may appoint one or more of its officers as an “Investigating Officer” to undertake inspection of affairs of an insurance Agent, to ascertain and see whether the business is carried on by him/her as per the Act, Regulations and the instructions issued by the Authority from time to time, and also to inspect the books of accounts, records and documents of the Agent. Provided such inspection will be limited to the matters pertaining to insurance business undertaken by the Insurance Agent.
2) The Investigating Officer may, during the course of the inspection, examine on oath the insurance agent or any person who is found to be in possession or control of any books, accounts or other documents, and any statement made by the insurance agent or such person during such examination may thereafter be used as evidence in any proceedings under these Guidelines.
3) The Authority may also call for any information from the insurance agent and he shall submit the same within the time lines referred therein by the Authority.
4) The purposes of inspection under this Clause may include but are not limited to ;-
a) Monitoring compliance with the provisions of the Act, rules, regulations etc.
 b) Investigation of the complaints of serious nature received from any insured, any insurers, other stakeholders or any other individual on any matter having a bearing on the insurance related activities of the Agent; and
c) Investigating into the affairs of the Insurance Agent in the interest of proper development of insurance business or in protection of policyholder’s interest.
X. Suspension of Appointment of an Agent:
1) The appointment of an agent may be cancelled or suspended after due notice and after giving him/her a reasonable opportunity of being heard if he/she:-
a) violates the provisions of the Insurance Act,1938 (4 of 1938), Insurance Regulatory and Development Authority Act, 1999 (41 of 1999) or rules or regulations, made there under as amended from time to time;
b) attracts any of the disqualifications mentioned in Clause VII.
c) Fails to comply with the code of conduct stipulated in Clause VIII and directions issued by the Authority from time to time.
d) Violates terms of appointment.
e) Fails to furnish any information relating to his/her activities as an agent as required by the Insurer or the Authority;
f) Fails to comply with the directions issued by the Authority;
g) Furnishes wrong or false information; or conceals or fails to disclose material facts in the application submitted for appointment of Agent or during the period of its validity.
h) does not submit periodical returns as required by the Insurer/Authority;
i) does not co-operate with any inspection or enquiry conducted by the Authority;
j) fails to resolve the complaints of the policyholders or fails to give a satisfactory reply to the Authority in this behalf;
XI. Manner of holding enquiry before/after suspension of appointment of the insurance Agent:
1. The appointment of an insurance agent shall not be cancelled unless an enquiry has been conducted in accordance with the procedure specified in this clause.
2. For the purpose of holding an enquiry under this clause, the insurer may appoint an Officer as an Enquiry Officer within 15 days of the issue of the suspension order;
3. The Enquiry Officer shall issue a show cause notice to the insurance agent at the registered address of the insurance agent calling for all information / data as deemed necessary to conduct the enquiry and grant the insurance agent a time of 21 days from date of receipt of the show cause notice, for submission of his/her reply and such information / data called for;
4. The insurance Agent may, within 21 days from the date of receipt of such notice, furnish to the enquiry officer a reply to the Show cause notice together with copies of documentary or other evidence relied on by him or sought by the Enquiry Officer;
5. The Enquiry Officer shall give a reasonable opportunity of hearing to the insurance agent to enable him to make submissions in support of his/her reply;
6. The insurance agent may either appear in person or through any person duly authorised by him to present his case, provided however that the prior approval of the Insurer is obtained for the appearance of the ‘Authorised Person’;
7. If it is considered necessary, the Enquiry Officer may require the Insurer to present its case through one of its officers;
8. If it is considered necessary, the Enquiry Officer may call for feedback/information from any other related entity during the course of enquiry;


9. If it is considered necessary, the Enquiry Officer may call for additional papers from the insurance agent; 10. The Enquiry Officer shall make all necessary efforts to complete the proceeding at the earliest but in no case beyond 45 days of the commencement of the enquiry: Provided that in case the enquiry cannot be completed within the prescribed time limit of 45 days as mentioned in
(10) above; the enquiry officer may seek additional time from the Insurer stating the reason thereof;
11) The Enquiry Officer shall, after taking into account all relevant facts and submissions made by the insurance agent, shall furnish a report making his/her recommendations to the Designated Official. The Designated Official shall pass a final order in writing with reasons. The order of designated official shall be signed and dated and communicated to the agent.
XII. Procedure for Cancellation of Agency: On the issue of the final order for cancellation of agency of the insurance agent, the agent shall cease to act as an insurance agent from the date of the final order.
XIII. Publication of order of suspension/ Cancellation.—
1. The order of suspension/cancellation of appointment of the insurance Agent made under clause XI and XII shall be displayed on website of the Insurer and updated in centralised list of agents maintained by the Authority, so that registration of new business by the suspended/Cancelled agent is stopped forthwith by the insurers.
2. On and from the date of suspension or cancellation of agency appointment, the insurance agent, shall cease to function as an insurance agent.
XIV. Effect of suspension/cancellation of Agency appointment.—
1) On and from the date of suspension or cancellation of the agency, the insurance Agent, shall cease to act as an insurance agent.
a) The insurer shall recover the Appointment letter and Identity card from the agent whose appointment has been cancelled under these Guidelines within 7 days of issuance of final order effecting cancellation of appointment.
 b) The insurer shall black list the agent and enter the details of the agent whose appointment is suspended/cancelled into the black listed agents database maintained by the Authority and the centralised list of agents database maintained by the Authority, in online mode, immediately after issuance of the order effecting suspension/cancellation.
c) In case a suspension is revoked in respect of any agent on conclusion of disciplinary action by way of issuance of a speaking order by Designated Official, the details of such agent shall be removed from list of black listed Agents as soon as the Speaking Order revoking his/her suspension is issued.
d) The insurer shall also inform other insurers, Life or General or Health Insurer or mono line insurer with whom he/she is acting as an agent, of the action taken against the Agent for their records and necessary action.
2. Nothing contained in the above regulation shall prevent the Authority to initiate penal action keeping in mind the extent of violation and level of violation as per the provisions of the Insurance Act, 1938, regulations and rules there under.
XV. Appeal Provision: An agent who is aggrieved by the order of cancellation can appeal to the insurer within 45 days of the order. The insurer shall appoint an Appellate Officer who shall examine the appeal and give his decision in the matter in writing within 30 days of the receipt of the appeal.
XVI. Procedure to be followed in respect of resignation/surrender of appointment by an insurance agent:
1) In case an insurance agent appointed by an insurer wishes to surrender his agency with his/her insurer, he/she shall surrender his appointment letter and identity card to the designated official of the insurer with whom he/she is currently holding agency.
2) The Insurer shall issue the cessation certificate as detailed in Form 1-C within a period of 15 days from the date of resignation or surrender of appointment.
3) An agent who has surrendered his appointment may seek fresh appointment with other insurer. In such a case, the agent has to furnish to the new insurer all the details of his/her previous agency and produce Cessation Certificate issued by the previous insurer issued in Form I-C, along with his agency application form.
4) The insurer will consider the agency application as outlined in Clause IV after a period of NINETY DAYS from the date of the issue of the cessation certificate by the previous insurer.
XVII. General conditions for appointment of Agents by the insurer:
1) The Insurer shall frame a ‘Board Approved Policy’ covering Agency Matters as listed in Annexure I and file the same with the Authority before 31st March every year. The guidelines for the ‘Board Approved Policy’ to be framed by the Insurer are mentioned in detail in Annexure – 1
2) No individual shall act as an insurance agent for more than one life insurer, one general insurer, one health insurer and one of each of other mono-line insurers
3) Any individual, who acts as an insurance agent in contravention of the provisions of this Act, shall be liable to a penalty which may extend to ten thousand rupees.
4) Any insurer or any representative of the insurer acting on behalf of the insurer, who appoints an individual as an insurance agent not permitted to act as such or transact any insurance business in India shall be liable to penalty which may extend to one crore rupees.
5) No insurer shall, on or after the commencement of the Insurance Laws (Amendment) Ordinance 2014 appoint any Principal Agent, Chief Agent, and Special Agent and transact any insurance business in India through them.
6) No person shall allow or offer to allow, either directly or indirectly or an inducement to any person to take out or renew or continue an insurance policy through multilevel marketing scheme.
7) The Authority may through an officer authorized in this behalf, make a complaint to the appropriate police authorities relating to the entity or persons involved in the Multi-Level Marketing schemes
8) Every insurer and every Designated Official who is acting on behalf of an insurer in appointing insurance agents shall maintain a register showing the name and address of every insurance agent appointed by him and the date on which his appointment began and the date, if any, on which his appointment ceased.
9) The records as mentioned in (8) above shall be maintained by the insurer as long as the insurance agent is in service and for a period of five years from the cessation of the appointment.
XVIII. Existing Agents licensed by Authority---
1. Insurance agents holding a valid license issued by the Authority to act as insurance agents of different insurers and agents whose licenses are tagged to standalone health insurers / Agriculture Insurance Company Ltd under special permission granted by the Authority to Standalone Health Insurers /AIC of India shall be deemed to have been appointed by the respective insurers, and shall continue to operate as insurance agents of the respective Standalone Health insurers /AIC of India.
2) The Designated Official of insurer shall recover the agency license and identity cards issued on behalf of the Authority to the agent before commencement of these Guidelines, and issue the agents, appointment letters and fresh identity cards under these guidelines within 90 days of commencement of these Guidelines.
3) The agency license and identity card issued on behalf of the authority and recovered by the insurer and the fresh appointment letter issued by the insurer should be carefully preserved by the insurer for submission to the Authority as and when called for.
XIX. Power to remove difficulties: In order to remove any difficulties in respect of the application or interpretation of any of the provisions of these Guidelines, the Chairperson of the Authority may issue appropriate clarifications or guidelines, as and when required.
(T.S.Vijayan) Chairman



POSTED BY DIVISIONAL  SECRETARY,COIMBATORE DIVISION, LIAFI,COIMBATORE ON 21/03/2015 AT 5.00PM

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LIC's PREMIUM WAIVER BENEFIT RIDER

Paid Agency System - new initiative from IRDAI

PAID AGENCY SYSTEM NEW INITIATIVE FROM IRDA

CLIA is almost scrapped through Insurance amendment Ordinance 2014, IRDA has introduced a new channel of Distribution called Insurance Marketing Firms(IMF) w.e.f 28-02-2015. Any Individual who is Graduate with Insurance experience of five years can apply for a License of IMF. Many retired LICians can start these firms. The IMF will recruit Insurance Sales Person who is a rolled employee of the firm and the Insurance Companies need to pay the remuneration of ISP(insurance sales persion) which is not less than Rs 5000 per month. In effect it’s called paid agent(CPA).

 Capital Requirements//

 The individual taking IMF need to establish himself that he had Net worth of Rs 10,00,000/-. A chartered accountant certificate to this effect is only required.

 Multiple tie ups with Insurance Companies//

 Registration of Insurance Marketing Firm by engaging ISP for the purpose of soliciting and procuring Insurance Products of two Life, two General and two Health Insurance companies at any point of time, under intimation to the Authority.

 The requirements for becoming ISP//    

 1. 12th pass

 2. Passing the specific test for ISP (50 hours training)

 Remuneration to IMF//

 The remuneration payable to Insurance Marketing Firm by the Insurer, for the solicitation of policies by the ISPs shall be as specified by the Authority, from time to time, under Secs. 40(1) and 40(2) of the Act, as amended from time to time

 Every ISP employed by the Insurance Marketing Firm shall be paid a fixed monthly salary, which is not lower than Rs. 5,000 per month or such other sum as may be specified by the Authority from time to time.

 In addition, the Insurance Marketing Firm may receive fees or charges from life insurance companies only in the form of service charges for recruitment, training and mentoring of their ISPs. These fees or charges shall not exceed 50% of first year commission and 10% of renewal commission received by IMF.

 No such payment shall be made in case of general/health insurance business.

 The life insurance companies shall have to disclose to the Authority upfront at the time of filing their products under file & use guidelines on payment of such fees or charges to the Insurance Marketing Firm.

 Job Security for ISP//

 Ø The Insurance marketing Firm under no circumstances can dismiss the ISP from employment during the period of the registration i.e. for 3 years, except as allowed under Reg. 27 (2) (b). So no cost norms or MBG.

 Ø There is no age bar specified in the regulations regarding Insurance Sales Person.

 Ø There is no recruitment bar of ISP specified in the Regulations.

 GOIB for ISP//

 In addition to the minimum amount specified above, the Insurance Marketing Firm, depending upon ISPs performance can pay him additional incentives, which are declared upfront and form part of the employment agreement between him and the Insurance Marketing Firm.

 Indemnity Insurance// The IMF and its ISP need to take compulsorily Loss reducing Indemnity Insurance for 10 lakhs where in there is any dispute with customer and found that there was misconduct or fraud, the Indemnity insurance will take care of the losses. So no fear of writing MHR

 Agents can become ISP// Existing agents can surrender there license and Join IMF as ISP. For an ISP to become an Insurance agent NOC from IMF is required.

 Already there is reluctance from people to join as agents since there is no fixed salary, here they can get fixed salary + Incentives, Job security, No MAB and can sell LIFE, General and Health insurance of 2 companies each. Private companies will definitely promote these kinds of marketing firms and there will be lot of mis selling in the Market and the biggest surprise is for conducting Inspection in IMF by IRDA ten days prior notice to be given. Acche din ayegga?

 There may be omission and Correction in this article, please suggest any modifications required

 see the Gazette Notification of the IMF regulations in IRDA website

RE SCHEDULE OF AGITATION PROGRAMME

New Proposal Forms Nos. 300,340, and 360.

Zero Hour Q raised by Mr. Udit raj, MP (BJP)