Millennium Post

Norms for appointment of agents by insurers tightened

Norms for appointment of agents by insurers tightened
To check ponzi-like activities in insurance sector, the new Ordinance has prohibited multi- layered agent structure for sale of insurance products, while it has also barred offers aimed at inducing people to buy or renew policies through multi-level marketing schemes. Under the newly promulgated Ordinance, insurers cannot appoint any "principal agent, chief agent and special agent", neither they can transact any insurance business through them.

"No person shall allow or offer to allow, either directly or indirectly, as an inducement to any person to take out or renew or continue an insurance policy through multilevel marketing schemes," the Ordinance says further. These provisions are aimed at checking mis-selling of insurance products by agents to earn high commissions, as also the practice of trail commissions that high-ranking agents get for the business generated by their subordinates or sub-agents recruited by them.

The Ordinance also provides that no person can act as an insurance agent for more than one life insurer, one general insurer, one health insurer and one of each of the other mono-line insurers. Besides, the insurance regulator IRDA has been asked to frame necessary rules to ensure that there is no conflict of interest when an agent represents two or more insurers, across segments such as life and general insurance.

Besides, a minor person cannot be appointed an insurance agent and others disqualified to become an agent include those with unsound mind or those having found guilty of a crime including forgery, provided five years have lapsed since competition of the sentence. Besides, payment of any commission to the agents would need to be in accordance with the applicable regulations of IRDA.
PTI

PTI

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