Regulatory Aspects of Insurance Agents|Finance
The rules regarding recruitment of insurance agents have been introduced from 1st April 2016.
Appointment of insurance agent by the insurer:
1. The applicant has to submit the application in Form I-A to the nominated officer insuring.
2. The insuring officer will ensure that the applicant has provided all the necessary information including PAN along with the form.
3. The list is made after verifying whether the applicant is fulfilling all the conditions of appointment and an appointment letter is given to the applicant within 15 days.
4. An illustrated identity card is issued to the applicant employed as an insurance agent.
5. If the applicant does not meet any of the conditions of the rules, his appointment may be rejected by the designated officer and the reason may be given to the applicant in writing within 21 days.
Recruitment of Composite Insurance Agent by Insurer:
Applicants wishing for a Composite Insurance Agent must apply in the relevant Form I-B. After that it will be accepted after verification as per the conditions.
Code of Conduct for Insurance Agents:
1. Introduce yourself and the company. Show your identity card to the candidate.
2. Disseminate information about insurance products and keep in mind the needs of the prospect.
3. If the candidate wants to know, the agent should disclose part of his commission to the candidate.
4. Disclosure of all information regarding the insurance that the prospect is purchasing.
5. The agent should be aware of the bad habits or income instability of the insured and submit it to the company in the form of a report. This is called an ‘insurance agent’s confidential’ report.
6. Collect all other information from the insurer including filling the proposal form.
7. Inform the insured of all the possibilities that may affect the nomination under the policy.
8. Provide necessary assistance to the policyholder in settling the claim from the insurer.
A) Insurance regulations and regulatory framework :-
i) Importance of insurance regulations : Some common concerns are: is insurance legal; are agents recognized by law; are insurers regulated or supervised; is document provided legally valid; will claim be paid if loss happens.
ii) Requirement of insurance regulations : The prime purpose is policy holder’s protection. As we have RBI in order to regulate all banks in India and SEBI (securities exchange board of India) to regulate all capital markets. Similarly we have IRDA (Insurance Regulatory and Development Authority) to keep check on all insurance companies in India.
iii) Insurance regulatory framework : The insurance act 1938 is the basic insurance legislation of the country, which governs insurance business in India. The IRDA was established in 1999. The obligations prescribed by regulator to insurer are applicable –at the point of sale; towards policy servicing; claims servicing; control on expenses & investments; financial strength to meet the commitments to policy holder.
B) Regulations and code of conduct applicable to insurance agents :-
As per the insurance act 1938 (section 42), to work as an insurance agent, one must have a valid licence. IRDA deals with issuance of licences and other matters related to agents recruitment. Agents of life and non-life (general) insurance can do business for standalone health insurance companies as well. Agents who want to change their insurance companies need to submit NO-Objection certificate (NOC).
Rules governing licensing of insurance agents:-
✶ Qualification – he must be 10th pass for all areas to be accepted.
✶Practical training – for 1st time applicants 50hrs training is required and composite license 75hrs.
✶Examination – the applicant must pass pre-recruitment exam.
✶ Fees payable – Rs.250 is payable for issue of license to act as an agent.
✶Cancellation of license – in case of any disqualification mentioned, the license is cancelled.
✶ Duplicate license – on payment of Rs.50 duplicate license can be issued in case of loss.
✶ Disqualification of license – the applicants license can be disqualified if- he is minor; he is of unsound mind; he is found guilty of criminal misappropriation or breach of trust/ cheating or forgery; he is found committing fraud, dishonesty.
✶Renewal of license – after every 3yrs license is to be renewed along with 25hrs of training.
Insurance Agency Exam:
1. Applicant must pass the insurance agency exam. The insurance agency will then provide the necessary assistance and instructions to prepare the applicants who have passed.
2. Passed applicants will receive a pass certificate which will be valid for 12 months for the first time to act as an insurer.
3. Those who have a pass certificate after graduation will be allowed to work as the only qualified agent.
4. An insurance agent cannot work and the conditions of his disqualification will be as per the conditions of section 42 (3) of the Act.
C) Agent’s code of conduct :-
✶ Disclose his license to the proposer on demand.
✶Explain carefully all information regarding the product.
✶Indicate the premium to be charged
✶Obtain required documents from the proposer
✶Assist policy holder in filling up the form
✶Disclose commission to be received on the policy if policy holder demands for it.
✶Cannot solicit the business of insurance without holding valid license.
✶Cannot offer different rates, terms and conditions which are not mentioned in policy.
✶Cannot force any policy holder to close any policy.
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