The Insurance Regulatory and Development Authority of India (IRDAI) notified new norms for corporate agents allowing them to tie up with up to three insurers each — life, non-life, and health insurance segments.
The new rule called ‘Insurance Regulatory and Development Authority of India (Registration of Corporate Agents) Regulations, 2015’ has been notified in the official gazette and would be effective from 1st April, 2016 onwards.
As per the new regulations, an applicant for corporate agency, who is engaged in insurance distribution, shall have a minimum equity share capital or net worth of Rs. 50 lakh. A corporate agent shall sell general insurance products with a total sum insured not exceeding Rs. 5 crores per risk for all insurances combined. Further, all corporate agents will have to be registered with the regulator before entering into distribution agreements with the individual insurers.
The regulations explicitly prohibit insurers from paying of any sign-up bonus to a corporate agent or offering any incentives (cash or non-cash) to the principal officer, specified people, or its employees.
Till now, corporate agents were allowed to sell policies of only one life insurance and one non-life insurance company. Manoj Kumar Jain, CEO of Shriram Life Insurance Company stated in BusinessLine —“Industry requirement is that it should be made mandatory for corporate agents to have tie-ups with more than one insurer. According to the new norms, this is only optional. It is still a positive development.”