When you talk about insurance companies, the term “marketing” doesn’t naturally come to your head. That’s the reason many consider an Insurance Marketing Firm to be an enigma. It goes through the same insurance registration procedure as the rest of the insurance intermediaries.
However, from the business infrastructure to its mode of operation – everything is different.
In this article, we will explore the aspects that differ in an IMF and other insurance entities.
What is an Insurance Marketing firm in India?
An insurance marketing firm is an IRDA-licensed insurance entity that provides the following services:
- Soliciting and procuring insurance products
- Giving insurance services to the clients,
- Rendering financial services that have the approval of IRDA,
- Marketing certain financial products in India
Difference between an IMF and the rest of Insurance entities
By looking at these points, you can gather that an IMF provides more services than other insurance entities.
- An insurance broker and only solicit and procure insurance policies.
- An insurance web aggregator can only provide a platform that allows customers to compare between different insurance policies.
- Similarly, only a surveyor and loss assessor has to right to verify the insurance claims.
An IMF can provide all the above services by establishing strategic alliances with other insurance intermediaries. To prove this, we can extrapolate the following points from the IMF services.
- The act of soliciting and procuring insurance services is the job of an Insurance web aggregator that an insurance marketing firm has the permission to provide.
- When providing insurance services, an IMF can partner up with other intermediaries such as surveyor and loss assessors or ISNPs.
- Other than providing services of the insurance domain, an Insurance marketing firm has the permission of the IRDA to render other financial services.
- Finally, it’s the other financial products that an IMF provides, consisting of:
- Mutual funds of SEBI regulated business entities,
- PFRDA regulated Pension products,
- Financial services of Investors with licenses from SEBI, and
- Products sold by banks and NBFCs
Based on these services, should you choose to start an Insurance Marketing Firm in India?
Three reasons that you should choose an Insurance Marketing Firm
After seeing a plethora of insurance-related services you can render through an IMF, starting one feels like an attractive and lucrative proposition. If we try to give words to the reasons for setting up an Insurance Marketing firm, we come up with the following ones:
- It doesn’t tether to just insurance services: If providing only insurance products won’t satisfy your ambitions, starting an Insurance Marketing firm is a much better option.
- Flexible objectives: Starting an Insurance Marketing firm doesn’t mean you have to provide all the listed services. Other than soliciting insurance products, you can choose among the listed.
- There aren’t many insurance marketing firms in India: No entrepreneur, regardless of the size, has been strong enough to opt for an Insurance Marketing Firm. Therefore, the market opportunities for an IMF are many.
- Partnership with other insurance entities: You won’t need to rely only on your expertise as an IMF. By establishing strategic partnerships with other insurance entities, you can expand the pool of your services.
3 reasons why you shouldn’t choose an Insurance marketing firm
Yes, starting an Insurance Marketing Firm can be quite lucrative. Unfortunately, it’s not one of those business ventures for which we can confidently say - “Yes! YOU CAN DO IT.”
An Insurance marketing firm has many insurance entities working in tandem. Thus, your expertise in the insurance market has to be more than average. It brings to light three reasons what starting an insurance marketing firm won’t be the right choice for you:
- Investing in gaining expertise: Like other insurance intermediaries, getting an Insurance marketing firm license entails clearing the IRDA examination. When preparing for this examination, you need to gain knowledge beyond what the IRDA website can provide. As a result, you’d need to invest extra in gaining knowledge about the insurance markets in India.
- Difficulty in maintaining a strategic alliance: Throughout the validity of your Insurance Marketing Firm License, you must abide by what you’ve written in your company’s Memorandum of Association. It means that if you’ve stated that you provide “Insurance services”, you must retain the relationships you’ve established with the providers of those services. And you must do so throughout the validity period of your license. In the long run and chancing IMF regulations, maintaining relations can be quite an ordeal.
- Vast infrastructural resources: An insurance marketing firm is not a suitable insurance entity for a startup entrepreneur. Because the infrastructural and financial requirements are many, operating an IMF might not be feasible for any startup in India.
An insurance marketing firm encompasses a lot more objectives than just providing insurance services in India. It can provide financial facilities and market services for which it has the approval of the regulatory authorities. In this blog, we have stated the differences between an Insurance marketing firm and other intermediaries.
Furthermore, we have also given you reasons why you should or shouldn’t choose an IMF as your insurance entity of choice.
If you have any comments to share or wish to add to this topic, please feel free to converse with us through the comment section.
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