Insurance Regulatory and Development Authority of India
NOTIFICATION
Hyderabad, the 24th July, 2019
Insurance Regulatory and Development Authority of India (Registration of Insurance Marketing Firm) (Amendment) Regulations, 2019.
F. No. IRDAI/Reg/9/160/2019.— In exercise of the powers conferred by Section 114A read with Sec.42 D and 42 E of the Insurance Act, 1938 (4 of 1938), as amended from time to time, read with Sections 2(1)(f), 14 and 26 of the Insurance Regulatory and Development Authority Act, 1999 (41 of 1999), as amended from time to time, the Authority in consultation with the Insurance Advisory Committee, hereby makes the following amendments to the Insurance Regulatory and Development Authority of India (Registration of Insurance Marketing Firm) Regulations, 2015, namely:
1. Short title and commencement:
1.1 These Regulations may be called the Insurance Regulatory and Development Authority of India (Registration of Insurance Marketing Firm) (Amendment) Regulations, 2019.
1.2 They shall come into force on the date of their publication in the Official Gazette.
Objective: The objective of these Regulations is to amend the Insurance Regulatory and Development Authority of India (Registration of Insurance Marketing Firm) Regulations, 2015 to provide an enabling environment to the Insurance Marketing Firms in order to help them achieve the objective of increasing insurance penetration in the country.
2. In the Insurance Regulatory and Development Authority of India (Registration of Insurance Marketing Firm) Regulations, 2015,
2.1 In Regulation 2, the following provision shall be inserted after Regulation 2.3, namely:
“2.3A “Aspirational District” means a district designated as such by the NITI Aayog, Government of India or any other economically backward district, as may be recognized by the Authority.”
2.2 In Regulation 2.9, the words “and who holds a valid certificate issued by the Authority for the purposes of the same” shall be omitted.
2.3 In Regulation 2.11, the words “supervise the activities” shall be substituted, namely: “carry out the functions”.
2.4 Regulation 3(a) shall be substituted, namely:
“3(a)(i) Tie-ups with insurers:
The Insurance Marketing Firms (IMF) shall engage Insurance Sales Persons (ISP) for the purpose of soliciting and procuring insurance products of maximum of two Life insurers, two General insurers and two Health insurers at any point of time, under intimation to the Authority.
Provided that in addition to two General insurers, Insurance Marketing Firm shall have option to engage with Agriculture Insurance Company of India Ltd. (AIC) and Export Credit Guarantee Corporation Ltd. (ECGC).
Provided further that any change in the engagement with the insurers shall be governed by the terms of the agreement entered into between the Insurance Marketing Firm and the insurer, with suitable arrangements for servicing existing policyholders by the concerned insurer, in case of cancellation/termination/discontinuity of agreement.
The Insurance Marketing Firm shall intimate the Authority of any such change in the engagement with insurers in the format specified by the Authority in this behalf. “
(ii) Products allowed for Insurance Marketing Firms:
The Insurance Marketing Firm shall be allowed to solicit or procure:
1. all kinds of products sold on individual and / or retail basis, including crop insurance for non-loanee farmers and combi products.
2. property, group personal accident, group health, GSLI and term insurance policies for Micro, Small and Medium Enterprises (MSME). The IMF shall not be allowed to solicit and procure commercial lines of business for any segment except for MSMEs.
Explanation: For the purpose of these Regulations,
a. “Combi products” mean any combination of products of life, general and health insurance as approved by the Authority.
b. “Micro, Small and Medium Enterprises” shall have the meaning as defined in ‘The Micro, Small and Medium Enterprises Development Act, 2006’, as amended from time to time.”
2.5 Regulation 3(b)(i) shall be substituted, namely:
“undertaking such activities of insurers as allowed in the Insurance Regulatory and Development Authority of India (Outsourcing of Activities by Indian Insurers) Regulations, 2017, as amended from time to time;”
2.6 Regulation 3(b)(iii) shall be omitted.
2.7 In Regulation 4.1(b), the words “plus applicable tax” shall be omitted.
2.8 Regulation 4.1(e) shall be omitted.
2.9 In Regulation 4.1(f), after the words “Insurance Marketing Firm”, the following shall be inserted, namely: “, if the Insurance Marketing firm proposes to become approved person of Insurance Repository”
2.10 Regulation 6.1 shall be substituted, namely:
“The applicant shall have a net worth of:
a. Not less than five lakh rupees, if the applicant is opting for only one district, which is an aspirational district.
Provided that increase in net worth arising out of change of status of aspirational district is mandatory at the time of renewal of registration.
b. Not less than ten lakh rupees for all other cases.
Explanation: For the purposes of these Regulations, “net worth” shall have the meaning assigned to it in the Companies Act, 2013 and as amended from time to time.”
2.11 In Regulation 6.3, the words “do not exceed forty-nine per cent of paid up equity capital or contribution of the Insurance Marketing Firm at any time” shall be substituted, namely: “shall not exceed such per cent of limits as prescribed by the Central Government from time to time, under Indian Insurance Companies (Foreign Investment) Rules, 2015.”.
2.12 In Regulation 7, the following provision shall be inserted after Regulation 7.5, namely:
“7.6 On resignation or termination or death of the Principal Officer, the Insurance Marketing Firm shall endeavor to appoint a new Principal Officer at the earliest, and seek approval, within a period not exceeding 60 days, from the Authority.
Provided that in the absence of a Principal Officer, a whole time director or managing partner or any other senior designated official of the Insurance Marketing Firm may, under intimation to the Authority, be authorized to act and perform the duties of the Principal Officer to meet regulatory compliance requirements only; and shall not solicit insurance business unless they have also undergone the training and passed the examination, and meet all the eligibility criteria of a Principal Officer.
The request for change of Principal Officer shall be made in the format specified by the Authority in this behalf.”
2.13 In Regulation 9.2, the words “subject to a minimum of Rupees ten lakh” shall be substituted, namely “for the preceding financial years subject to a minimum amount equal to the applicable net worth requirement “:
2.14 In Regulation 11.1, the words “of two life, two general and two health insurance companies only” shall be substituted namely, “as per Regulation 3(a) of these Regulations”.
2.15 In Regulation 11.7, the word “, FSEs” shall be omitted.
2.16 In Regulation 12.1, after the words “…suspended or cancelled by the Authority” the following shall be inserted, namely: “or surrendered by the Insurance Marketing Firm”
2.17 Regulation 12.3 shall be substituted, namely:
“In case the Authority suspends or cancels the registration of an Insurance Marketing Firm, or accepts the surrender of the registration of an Insurance Marketing Firm, the Insurance Marketing Firm shall cease to solicit new insurance business and continue to service the existing policies for a period of six months within which suitable arrangements shall be made by the Insurance Marketing Firm for having the contracts attended to and serviced by respective insurers or by any other intermediary with the approval of the Authority.”
2.18 Regulation 13.3 and Regulation 15.3 shall be substituted, namely
“Any applicant, aggrieved by the order of the Authority, may appeal to the Securities Appellate Tribunal.”
2.19 Regulation 13.4 and Regulation 15.4 shall be substituted, namely:
“If the application is rejected and the applicant chooses not to appeal against the order of rejection of the application or in case Securities Appellate Tribunal rejects the appeal, the applicant may make a fresh application for issuance of certificate of registration after lapse of one year from effective date of such order of the Authority or the Securities Appellate Tribunal, as the case may be, for consideration by the Authority. The Authority may consider such application on merit.”
2.20 Regulation 13.5 and Regulation 13.6 shall be omitted.
2.21 In Regulation 14.2(a), before the words “Submit an undertaking” the following shall be inserted, namely “The applicant shall”
2.22 In Regulation 14.3, the words “plus service tax” shall be omitted. The second proviso shall be substituted, namely: “Provided further that the Authority may consider applications received after 60 days but before one year of the expiry of the registration based on merits and on payment of a penalty of seven hundred and fifty rupees.”
2.23 Regulation 15.5 and Regulation 15.6 shall be omitted.
2.24 In Regulation 25, the words “exceeding 10%” shall be substituted, namely “exceeding 25%”.
2.25 In Regulation 26, after words “the following records” the following shall be inserted, namely “in physical form or electronic form or both”; the word “PMLA” shall be substituted, namely: “The Prevention of Money-laundering Act, 2002” and the words “with ACR” shall be substituted, namely “duly”.
2.26 In Regulation 27, the words “by the Insurance Marketing Firm” in the heading shall be omitted.
2.27 In Regulation 27.1, the word ‘prescribed’ shall be substituted, namely: ‘specified’.
2.28 Regulation 27.2 shall be substituted, namely:
“The Insurance Marketing Firm shall set up necessary IT systems with a capability of obtaining and monitoring:
a) Payment of minimum wages to the ISP by the Insurance Marketing Firm;
b) Details of each ISP on the rolls of the Insurance Marketing Firm unless he ceases to be an ISP of the Insurance Marketing Firm due to death or termination or resignation from the services of the Insurance Marketing Firm subject to informing the same to the Authority within 15 days of such incidence. The IMF shall ensure that there shall be at least one ISP per Office at all times. However, in case of death or termination or sudden exit of an ISP, the IMF must appoint an ISP immediately, but not later than 60 days of death/termination/exit of ISP and provide continuity of services to their existing policyholders without causing any inconvenience.
c) Any addition of ISPs shall also be intimated to the Authority within 15 days of the appointment.”
2.29 In Regulation 27, the following provision shall be inserted after Regulation 27.2, namely:
“27.3 Responsibilities of the insurers towards the Authority
(a) Every insurer shall:
i. File with the Authority, annually, a copy of the policy formulated by the company, for utilization of IMFs for penetration of insurance.
ii. File with the Authority, changes if any made in the policy submitted as stated in clause (i) above, within 15 days of such change with reasons thereof.
(b) Post issuance of the registration to an IMF, in case the insurer comes to know about any incidence of fraud or violation of code of conduct by the IMF, the insurer shall carry out detailed enquiry into such violation, and submit detailed confidential report to the Authority along with recommendations within 30 days.”
2.30 In Part I of Schedule I, clause (e) and (f) following shall be substituted, namely:
“(e) Graduate with Insurance experience of two years preceding the year in which the application is made; or
(f) Graduate with five years of experience in financial services sector preceding the year in which the application is made”.
2.31 In Part I of Schedule I, after clause (f) following shall be inserted, namely:
“
(g) Master’s in Business Administration or its equivalent from any institution / university recognized by UGC / AICTE / any State Government or the Govt. of India; or
(h) Associate / Fellow of the Institute of Chartered Accountants of India, New Delhi; or
(i) Associate / Fellow of the Institute of Cost Accountants of India, Kolkata; or
(j) Executive/Professional of the Institute of Company Secretaries of India, New Delhi; or
(k) Any other qualification specified by the Authority from time to time.”
2.32 In Part II of Schedule I, after clause (c) the following shall be inserted, namely:
“(d) If the proposed Principal Officer has undergone training and passed examination as required for the Principal Officer of an insurance broking company / Corporate Agent / Web Aggregator, then he / she shall be exempted from training and examination requirement to become the Principal Officer of the Insurance Marketing Firm.
Provided that the training and examination was undertaken within a period of five years preceding the date of application as Principal Officer of the IMF.”
2.33 In Part I of Schedule II, clause (C) shall be substituted, namely:
“ISPs engaged by the Insurance Marketing Firm are allowed to solicit and procure insurance products of those insurers with whom the IMF has entered into tie-up / agreement.”
2.34 In Part II of Schedule II, in clause (c), the word “domiciled” shall be substituted namely, “resident”.
2.35 In Part I of Schedule IV, clause (2) shall be substituted, namely:
“The payment of remuneration and/ or reward to an Insurance Marketing Firm by an insurer shall be as per Insurance Regulatory and Development Authority of India (Payment of commission or remuneration or reward to insurance agents and insurance intermediaries) Regulations, 2016 (as amended from time to time).
In addition, the Insurance Marketing Firm may receive reimbursement of expenses from Life insurers towards recruitment, training and mentoring of their ISPs. This reimbursement shall not exceed 50% of first year commission and 10% of renewal commission received by the IMF in case of Life insurers.”
2.36 In Part II of Schedule IV, sub clause (i) of clause (1) shall be substituted, namely:
“Every ISP employed by the Insurance Marketing Firm shall be paid a fixed minimum monthly salary as per the applicable laws. Variable pay over and above the fixed monthly salary may also be payable depending on the arrangement between the IMF and the ISP.”
2.37 In Part II of Schedule IV, sub clause (i) of clause (2) shall be omitted and sub clause (ii) shall be substituted, namely:
“An individual agent cannot migrate or join Insurance Marketing Firm as PO / ISP / Managing Partner / Director unless he has resigned from his existing agency appointment and meets the eligibility criteria as specified in these Regulations.
Provided that the continuation of agency benefits of an agent migrating to or joining an Insurance Marketing Firm shall be governed by the Board approved policy of the respective insurers”.
2.38 In Part II of Schedule IV, in sub clause (iii) of clause (2), the word “licensed” shall be substituted, namely:
“employed”
2.39 In Part III of Schedule IV, in clause (1) the word “domiciled” shall be substituted, namely “resident” and clause (2) and (3) shall be substituted, namely:
“(2) The “Area” is defined as the district for which the registration of the Insurance Marketing Firm is valid. Maximum of three districts within a State are allowed for registration/renewal.
(3) The Area selected by the Insurance Marketing Firm shall be clearly mentioned in the application Form A and renewal application Form AA while submitting the application to the Authority.
Provided that if an applicant is opting for more than one district, then at least one of the districts shall be aspirational.
Provided further that any addition of office or change in registered address by the Insurance Marketing Firm shall be done only with prior approval from the Authority. Request for addition of office or change in registered address shall be made to the Authority in the format as may be specified in this behalf.”
2.40 In Part III of Schedule IV, in clause (5), the following shall be substituted, namely: “The Insurance Marketing
Firm may apply for more areas subject to maximum of three districts while filing the application for Renewal of Registration”.
2.41 In Part III of Schedule IV, in clause (6) shall be substituted, namely:
“(6) The Insurance Marketing Firm shall specify the details of the offices to be set up in the Area opted; including manpower deployment in the application form for fresh registration and renewal. The additional areas opted at the time of renewal shall be considered on merits.
Provided that if the Insurance Marketing Firm has more than one office, it will ensure that each office shall have at least one ISP.”
2.42 In Part II of Schedule V, sub clause (ii) and (iii) of clause (a) shall be substituted, namely:
“ii. any change in the engagement with the insurers;
iii. any addition or deletion of ISPs;”
2.43 In Part II of Schedule VIII,
a. Clause 5 shall be substituted, namely:
“The Insurance Marketing Firm, aggrieved by the Order of the Authority, may appeal to the Securities Appellate Tribunal.”
b. Clause 6 shall be substituted namely:
“In case the Securities Appellate Tribunal after consideration of the application made under Clause 5 above, rejects the appeal, the applicant can make a fresh application for grant of registration only after one year from the date of final rejection. The Authority may consider such application on merit.”
c. Clause 7 shall be omitted.
d. Clause 8 shall be omitted.
2.44 In Schedule X, 4(b) shall be omitted.
2.45 In Form-A,
a) Table under Clause 1.6 shall be substituted, namely:
“
| Sl. No. | Details of Activities | please ‘tick’
wherever applicable |
| 1. | undertaking back office activities of insurers as allowed in the Insurance Regulatory and Development Authority of India (Outsourcing of Activities by Indian Insurers) Regulations, 2017 | |
| 2. | becoming approved person of Insurance Repositories |
b) In Clause 2.5 the words “The IMF and ISPs working under them may open account with those Bankers who have entered into an agreement with the Authority for providing information relating to payments made by IMF to ISPs on a regular basis for monitoring)” shall be omitted.
2.46 In Annexure-1, S. No. (a), the word “FMC” shall be omitted.
2.47 In Form B, Table under Clause 2, item (c) shall be omitted.
2.48 In Form C, Table under Clause 2, item (c) shall be omitted.
2.49 In Form D, Table under Clause 3, item (c) shall be omitted.
2.50 In Form D, Clause 4 shall be omitted.
2.51 In Form AA, in Clause 2.5, the words “(State Bank of India)” shall be omitted.
2.52 The Form titled “CERTIFICATE TO ACT AS INSURANCE SALES PERSON FOR AN INSURANCE MARKETING FIRM” shall be omitted.
Dr. SUBHASH C. KHUNTIA, Chairman
[ ADVT. III/4/Exty/151/19]
