Corporate agents under microscope | IRDA

Insurance regulator IRDA is taking strong measures to make the insurers more responsible. Insurance Companies have to be more responsible for actions of corporate agents, thus the decision to appoint a corporate agent should be taken at the highest level by a company. The regulator has even made it mandatory for insurers to undertake physical inspection at their corporate agent offices.

The order is passed because multi-level marketing companies are in tie-ups with insurance companies as a corporate agent. These companies sell policies through pyramid schemes by recruiting agents, who in turn recruit more agents and receive overriding commission on policies sold by all agents below them. Thus only the paperwork is done by the specified person in violation of the Insurance Act.
IRDA struck off its list 4,261 corporate agencies which were due for renewal on or before 31^st March, 2010 but not have been renewed till date. This was done day after instructions for inspection were issued. Their licenses have been withdrawn and Insurers and insurance seeker should be cautious not to transact any insurance deals through them.

IRDA has said that the decision to appoint a corporate agent should be taken either by the CEO, CFO, chief marketing officer or the head of distribution designated for appointing corporate agents. The officer has to conduct a due diligence of the corporate agent and ensure that it meets with all norms laid down by the regulator.

IRDA has proof of instances of some of the corporate agents who utilized the services of large number of people not having requisite license/certificate to solicit business and paid remuneration for procuring the business. There have been cases where corporate agents employ sub-agents who sell insurance contracts and the original corporate agents pass on the commission to these sub-agents.

In the cases where banks have been appointed as insurance agents, insurance companies have been asked to ensure that the bank is not forcing customers to buy insurance by bundling the cover with any banking product.

IRDA’s move to make the insurers more responsible will make the insurance business more transparent and this will build trust and faith in prospective insurance seekers to secure their lives, family, health, home, car etc.

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