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The insurance industry has become a crucial part of the nation’s economy. This sector is divided into two categories - life insurance and non-life insurance (general insurance). Both categories are governed by IRDAI, which monitors the entire insurance sector in India. To get into this industry, there are different ways such as an Insurance Marketing Firm (IMF), Corporate Agent, or other intermediaries.
The Insurance Marketing Firm (IMF) is a distribution channel introduced by the IRDAI in 2015. It offers different financial products required at different life stages, including health, life, and general insurance.
As per the IRDAI press release (November 25th, 2022), the limit for IMFs has been increased to 6 insurers for each category (life, general, and health), expanding from the earlier limit of 2 each. Along with these, tie-ups are allowed with:
Agriculture Insurance Company of India Ltd. (AIC)
Export Credit Guarantee Corporation Ltd. (ECGC)
While all types of life insurance products are allowed, only retail lines are permitted for general insurance. Additionally, an IMF can distribute other financial products permitted by RBI, SEBI, PFRDA, and the Department of Posts after obtaining necessary approvals.
A corporate agent is a company or an individual that represents insurance companies. As per Regulation 2 (b) of the IRDAI Regulations, 2015, they hold a valid certificate for solicitation and servicing of insurance business.
Corporate agents are also known as captive agents. Following recent IRDAI changes, they can now tie up with 9 insurers each for life, health, and general insurance (previously the limit was 3), totaling 27 potential partnerships. They are full-time employees or contractors who manage existing customers, promote products, and cater to potential customers for the specified companies they represent.
|
Points of Difference |
Insurance Marketing Firm (IMF) |
Corporate Agent |
|
Product Offerings |
Can distribute products of 18 insurers (6 each for life, health, and general). |
Can tie up with 27 insurers (9 each for life, health, and general). |
|
Customer Service |
Offers multiple types of products from various companies to cater to diverse needs. |
Focuses on excellence and specialized knowledge of a particular company’s products. |
|
Training & Support |
Provides comprehensive training including sales, marketing materials, and lead generation. |
Acts as an expert for specified companies, sharing detailed information on their specific products. |
|
Commission/Salary |
Works on a commission structure specific to IMFs. |
Often works on a salary basis rather than a direct commission basis. |
|
Specialization |
Provides personalized recommendations based on a deep understanding of multiple policies. |
Preferred by clients looking for a specific, well-known, and trusted brand name. |
From business infrastructure to the mode of operation, an IMF is different from other insurance entities.
Insurance Broker: Can only solicit and procure insurance policies.
Insurance Web Aggregator: Provides a platform for customers to compare different insurance policies.
Surveyor and Loss Assessor: Only has the right to verify insurance claims.
An IMF can provide services of the insurance domain by establishing strategic alliances with these intermediaries. For example, when providing insurance services, an IMF can partner up with surveyors, loss assessors, or ISNPs.
Other Financial Products unique to IMF:
Unlike other intermediaries, an IMF has permission to render:
Mutual funds of SEBI regulated business entities.
PFRDA regulated Pension products.
Financial services of Investors with licenses from SEBI.
Products sold by banks and NBFCs.
Reasons to choose an IMF:
Not tethered to just insurance: You can provide other financial services (Mutual funds, Pension products, etc.).
Flexible objectives: You can choose among the listed services based on your business goals.
Market Opportunities: There aren’t many insurance marketing firms in India yet, leaving the market open for entrepreneurs.
Strategic Partnerships: You can expand your service pool by establishing partnerships with other insurance entities.
Reasons why it might be difficult:
Investing in Expertise: Getting an IMF license entails clearing the IRDA examination, which requires knowledge beyond basic regulations.
Maintaining Alliances: You must maintain relationships with service providers throughout the validity of your license as per your Memorandum of Association.
Infrastructural Resources: Because of high financial and infrastructural requirements, operating an IMF might be challenging for a small startup.
An insurance marketing firm encompasses a lot more objectives than just providing insurance services; it provides a flexible product range and access to customizable financial offerings. On the other hand, corporate agents offer brand recognition and specialized knowledge. Unlike other intermediaries, an IMF can distribute mutual funds of SEBI regulated business entities and products sold by banks and NBFCs. Understanding these differences is essential when stepping into the insurance industry to decide which model fits your expertise and resources.
Hey there, I'm Dushyant Sharma. With the extensive knowledge I've gained in past 8 years, I have been creating content on various subjects such as banking, insurance, telecom, and all the important registration and licensing processes for various companies. I'm here to help everyone with my expertise in these areas through my articles.
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