Insurance Marketing Firm License

INTRODUCTION

The Insurance Marketing Firm (IMF) is a distribution channel established by the Authority in 2015, aimed at providing a comprehensive range of financial products needed at different stages of an individual's life. These firms are registered by the Authority under the Insurance Regulatory and Development Authority of India (Registration of Insurance Marketing Firm) Regulations, 2015 (IMF Regulations). The registration is on a district-wise basis, allowing IMFs to operate in a maximum of three districts within a state.

IMFs operate on an open architecture model, which means they can solicit and procure insurance products from a maximum of two Life insurance companies, two General insurance companies, and two Health insurance companies simultaneously. Additionally, IMFs can establish tie-ups with the Agriculture Insurance Company of India Ltd. (AIC) and the Export Credit Guarantee Corporation Ltd. (ECGC). Life insurance products of all types can be procured through IMFs, while only retail lines of general insurance products are permitted.

In addition to insurance products, IMFs have the authority to distribute other financial products, subject to approvals from relevant authorities such as the RBI, SEBI, PFRDA, Department of Posts, etc. This allows IMFs to offer a diversified portfolio of financial services to their customers, making them a one-stop-shop for various financial needs.

ACTS, RULES, AND REGULATIONS THAT ARE RELEVANT AND CONTROL THE INSURANCE MARKETING FIRM LICENSE 

The following laws, rules, and regulations apply to an insurance marketing firm's operations:

• Insurance Act of 1938;
• The Insurance Regulatory and Development Authority of India's (Registration of Insurance Marketing Firm) Regulations, 2015;
• Regulatory and Development Authority Act for Insurance, 1999;

The Insurance regulating and Development Authority of India (IRDAI) is the principal regulating body for the Insurance Marketing Firm License. The Reserve Bank of India, the Securities Exchange Board of India, the Pension Fund Regulatory and Development Authority, and the Department of Posts all have authority over the licensing of insurance marketing firms.

CRITERIA FOR ACQUIRING A LICENSE FOR AN INSURANCE MARKETING FIRM

1. Corporate Organization

An application for an insurance marketing firm license may be any of the following, in accordance with Regulation 2.2 of the IRDAI (Registration of Insurance Marketing Firm) Regulations, 2015:

• A corporation created in accordance with the Companies Act of 2013 or
• The earlier Company Law of 1956;
• A partnership registered in accordance with the Limited Liability Partnership Act of 2008;
• Any other person or organization that is authorized to perform operations linked to an Insurance Marketing Firm;
• A co-operative society that is registered under the Co-operative Society Act of 1912.

2. Investment Requirements

To apply for a license as an insurance marketing firm, a candidate must satisfy the capital requirements listed in Regulation 6 of the IRDAI (Registration of Insurance Marketing Firm) Regulations, 2015.

• Net Worth - The applicant's net worth cannot be less than Rs. 10 lakhs.
• In order to be granted license to operate as an insurance marketing firm in a particular district, the applicant's net worth must be at least Rs 5 lakhs.
• The applicant is required to maintain the company's net worth at all times. Within three months of the end of the fiscal year, a certificate that has been certified by a chartered accountant must be presented for this purpose.

3. Overseas holding

At no point should the total amount of equity shares or contributions made to the company by foreign investors (including portfolio investors) exceed 49% of the paid-up equity capital of the Insurance marketing firm.

4. Name of the Company

The words "Insurance Marketing Firm" must appear in the name of the insurance marketing company.

5. Objectives of the Company

The applicant must be sure that selling insurance is the primary goal of the company. Both the Articles of Association (AOA) and the Memorandum of Association (MOA) must state these in the objective clause.

HOW TO APPLY FOR A LICENSE FOR AN INSURANCE MARKETING FIRM

To apply for IMF registration, the applicant must follow these steps and submit the necessary requirements:

• Register on the IMF portal and fill out Form A, providing all relevant information and uploading the required documents.
• Remit a non-refundable application fee of five thousand rupees from the bank account of the IMF.
• Submit a declaration from the principal officer, directors, or managing partners, confirming their compliance with the "Fit & Proper" criteria as per the prescribed format in the IMF Regulations.
• Provide a copy of the Insurance Marketing Firm Exam pass Certificate of the Principal Officer and the Insurance Sales Persons (ISPs) proposed to be engaged by the IMF.
• Submit copies of the Qualification Certificates and Experience Certificates of the Principal Officer.
• Provide copies of the Qualification Certificates of the ISPs along with their Address Proof within the state where the IMF is proposed to be registered.
• Submit an undertaking from the Principal Officer, as prescribed by the Authority, ensuring that the IMF will comply with the relevant regulations.
• Provide a Net Worth Certificate from a Chartered Accountant, certifying that the proposed IMF's Net Worth meets the minimum limit set by the IRDAI (Registration of Insurance Marketing Firm) Regulations, 2015, and any amendments.
• Submit the Bank Account statement of the IMF as support for the Net Worth Certificate.
• Furnish a copy of the Memorandum of Association (MoA) and Articles of Association (AoA) in case of a company, or the LLP Agreement in case of an LLP.
• Include a Three-Year business plan document detailing projected activities and income volume.
• Provide an Organization Chart illustrating functional responsibilities within the IMF.
• Submit details of Infrastructure, including Office Space (Rent Agreement/Sale Deed), Equipment, and Manpower (Photographs).
• Obtain consent letters from the Insurance Companies with which the applicant proposes to work. At least one consent letter is required.
• The application must comply with the authority's requirements.
• The application form must be signed by two directors.

DOCUMENTS NEEDED FOR INSURANCE MARKETING FIRM LICENSE

The following documents must be submitted by the applicant for registering an insurance marketing firm, under Annexure 2 of the IRDAI (Registration of Insurance Marketing Firm) Regulations, 2015:

• The provision of pertinent information as requested in FORM A
• The payment of the necessary fee by demand draft payable to Hyderabad.
• Submission of the applicant's MOA and AOA (Memorandum and Articles of Association) charter documents. Additionally, the company bylaws must be presented.
• The "Fit and Proper Form" will require declarations of Fit & Proper criteria from the Principal Officer, Directors, and Managing Partners (separately for each individual).
• Information on infrastructure and documentation to back it, such as ownership or lease agreement documents for office space, equipment, and trained personnel for registered.
• The revenue account, the profit and loss account, and the balance sheet are projected for the following three years based on projected administrative costs, salaries and wages, and other expenses.
• A complete image of the company's operations, including IT, risk assessment, claim resolution, marketing, accounts, and back office, is provided by the organization chart.
• Any other details pertaining to the type of services provided by the applicant for the expansion and marketing of the insurance industry.
• Any other restrictions that the authority deems necessary.

SERVICES PROVIDED BY A MARKETING FIRM FOR INSURANCE   

1. Insurance product marketing

Insurance Marketing Firms are allowed to promote and solicit for insurance-related products, according to IRDAI.

2. Servicing of Insurance Activities

Marketing companies are permitted to perform insurance servicing tasks on behalf of insurance companies under the rules of the Insurance Regulatory and Development Authority of India (IRDAI), including managing insurers' back-end operations as stated in the IRDAI's Guidelines on Outsourcing Activities by Insurance Companies.

3. Financial services marketing

Insurance marketing companies also market other financial products such as Mutual Funds of MF companies regulated by the Securities and Exchange Board of India (SEBI), Pension products regulated by PFRDA, products distributed by SEBI licensed Investment Advisors, Banking/financial products of banks/NBFCs regulated by SEBI, Non-insurance products offered by Department of Posts, Government of India, and any other financial product or activity permitted by the Securities and Exchange Board of India

Purpose Of Licensed Insurance Marketing Firm

To acquire and promote insurance-based products, the insurance marketing company works with a private ISP. ISP is contracted by insurance marketing businesses to find and acquire two Life, two General, and two Health Insurance companies. However, the authority will control this.

Validity And Renewal

An insurance marketing company's license is good for three years. A company that markets insurance cannot operate with a certificate that has expired.