INTRODUCTION

Insurance sector is a complex world, within which lies various insurance products and regulations making it a confusing choice for consumers to decide in. Without proper guidance and expertise, it can become almost difficult for consumers to make an informed choice about insurance coverage which can lead to costly mistakes. But don’t worry. There’s a solution and that is intermediaries in the insurance sector.

Insurance Regulatory and Development Authority of India (‘IRDAI’) which is the regulatory authority for insurance sector has established various intermediaries such as Insurance brokers, Insurance agents, Third party administrators, Insurance Repositories etc. These intermediaries are licensed professionals who provide invaluable assistance to the policyholders in making understand insurance policies, processing claims of the policyholders and take right decisions.

This article aims to explain in brief the insurance regulator i.e. IRDAI and its various intermediaries. Further, it aims to provide some tips that one should keep in mind while dealing with these intermediaries.

Read further to learn more about IRDAI intermediaries!

ABOUT IRDAI: THE INSURANCE REGULATOR

IRDAI expands to Insurance Regulatory and Development Authority of India. It is a statutory authority established under Insurance Regulatory and Development Authority Act, 1999. It is headquartered at Bengaluru, India. This body is responsible for regulation, supervision and development of insurance sector in India.

IRDA Act, 1999 and Insurance Act, 1938 prescribes the powers and functions of the authority. The Insurance Act, 1938 is the principal Act governing the insurance sector in India. This Act has authorized the IRDAI to make regulations concerning the regulation and supervision of entities that operate in the insurance sector. IRDAI is a public authority which also comes under the Right to Information Act, 2005. This implies that it is obliged to provide information to the public in accordance with the provisions of the said Act.

The major objectives behind setting up of IRDAI are as follows:

• Protection of interests of the policyholders.
• Speedy growth of insurance industry.
• Speedy settlement of genuine claims.
• Solving the grievances through grievance redressal system effectively.
• Promoting fairness and transparency in the financial markets.

INSURANCE INTERMEDIARIES

• Insurance Brokers

Insurance brokers are one of the key intermediaries who acts as a link between insurers and policyholders. They work independently, and not for any specific insurance company. They are responsible for providing advice and guidance on insurance products based on the client’s needs. They also facilitate claim settlements and renewals. It is mandatory for all the insurance brokers to obtain IRDAI's brokerage license. For example, Policybazaar Insurance Brokers Private Limited, Aditya Birla Insurance Brokers Limited etc. The regulations dealing with insurance brokers is IRDAI (Insurance Brokers) Regulations, 2018.

• Insurance Agents

Insurance agents are another set of intermediaries that play a crucial role by serving as a link between insurance companies and policyholders. They help the individuals and businesses select insurance policies according to their specific needs. Insurance agents are generally classified into two categories: First is the Individual agents and second is the Corporate agents. Both of these agents have been explained below:

• Individual Agents

These are the natural persons who have obtained license to sell insurance products on behalf of the insurance companies. They usually operate independently and are affiliated with single insurance company (referred to as ‘tied agent’) or multiple companies (referred to as ‘composite agent’). For example, ACKO General Insurance Limited, Bajaj Allianz General Insurance Company Limited etc. The regulations dealing with insurance agents is IRDAI (Appointment Of Insurance Agents) Regulations, 2016.

• Corporate Agents

Corporate agents are the firms or companies which are responsible and licensed for selling insurance products on behalf of the insurance companies. They solicit and procure insurance business on behalf of the insurer. Corporate agents represent single or multiple insurers but are restricted to a specific number of insurers. Like insurance brokers, it is mandatory for corporate agents to obtain IRDAI’s corporate agency license. Corporate agents can include banks, Non-Banking Financial Companies (NBFC) or any other company which meets the criteria specified by IRDAI. For example, State Bank of India, Bank of Baroda etc. The regulations dealing with registration of corporate agents is IRDAI (Registration Of Corporate Agents) Regulations, 2015.

There are several key differences between insurance broker and Insurance agents. These differences have been represented in tabular format as follows:

• IMF

IMF expands to Insurance Marketing Firms. These are the entities that are responsible for marketing and distributing insurance products. They basically act as a single-stop distribution entity for selling variety of insurance products. They offer products from multiple insurers and provide a range of services like policy issuance, claims assistance etc. IMFs are allowed to solicit and procure insurance business and offer insurance related services to the insurers. IMFs must be registered with IRDAI. For example, BellWether Insurance Marketing Firm LLP, Earnwealth Insurance Marketing LLP etc. The regulations dealing with IMF’s is Insurance Regulatory And Development Authority Of India (Registration Of Insurance Marketing Firm) Regulations, 2015.

• Insurance Repositories

Insurance repositories are the intermediaries who are responsible for providing policyholders a facility for keeping insurance policies in electronic form and to make any changes, modifications, and revisions in the insurance policy with speed and accuracy so that efficiency, transparency and cost reduction is achieved in insurance sector. This is similar to the securities depository where securities such as shares are held in electronic format.

This concept was introduced in 2011 by the IRDAI. The basic objective behind introducing this concept was to streamline the management of insurance documents which will make it easier for policyholders to access, manage and monitor their insurance policies anytime. In this system, policyholders are required to open a single e-insurance account (eIA) with the insurance repository. This e-account will hold multiple insurance policies at one place. IRDAI has granted the license to entities such as NSDL Database Management Limited, Central Insurance Repository Limited, Karvy Insurance Repository Limited and CAMS Repository Service Limited to open eIA.

The regulatory framework for insurance repository is the guidelines issued by IRDAI on Insurance Repositories and Electronic Issuance of Insurance Policies dated 29.04.2011, Circular for Procedure for appointment of Approved Persons dated 18.07.2013 and revised guidelines on Insurance Repositories and electronic issuance of insurance policies dated 29.05.2015.

• POS

POS expands to Point of Sale. These are the persons responsible and authorized for selling pre-approved, simple and standardized insurance products. For example, simple term insurance plans, basic health insurance policies etc. POS are required to undergo specific training and certification to ensure they can provide basic insurance services to the people. This concept was introduced by IRDAI to increase the insurance penetration into the country by facilitating broader range of individuals to become insurance sellers with minimal and easier training requirements. POS persons must be registered with IRDAI.

• ISNP

ISNP expands ‘Insurance Self Network Platform’. ISNPs are digital platforms that allow insurers to sell and service the insurance policies directly to consumers online. Consumers can compare, purchase and manage the insurance policies online. They provide a seamless interface for purchasing and managing insurance policies. ISNPs must be approved by IRDAI. The concept of ISNP was brought in by IRDAI to encourage the digital insurance distribution, enhance transparency and improve the customer experience in insurance sector by providing secure and efficient platform for transactions. ISNPs can be operated by insurers, brokers, corporate agents or any other authorized entity. The regulatory framework dealing with ISNP is the guidelines issued by IRDAI on 9^th March, 2017 as Guidelines on Insurance E-Commerce.

• Surveyors and Loss Assessors

Surveyors and loss assessors are professionals who are responsible for assessing the extent of loss or damage on behalf of insurance companies whenever a claim is made by the party. They play an important role in determining the claim amount and to ensure fair settlements. These intermediaries provide an impartial report to the insurance company for facilitating the settlement process. For example, JB Boda Insurance Surveyors & Loss Assessors Private Limited, Sharp Insurance Surveyors and Loss Assessors Private Limited etc. These Surveyors and Loss Assessors must be licensed by IRDAI.

• TPA

TPA expands to ‘Third Party Administrators’. This intermediary of IRDAI processes claims and facilitate settlements between insurer and policyholder. They are responsible for providing services and support, managing and administering insurance claims related to health insurance for insurance companies. For example, Health Insurance TPA of India Limited, Park Mediclaim Insurance TPA Private Limited etc. It is mandatory for them to obtain IRDAI’s TPA license. The regulation dealing with TPA’s is Insurance Regulatory And Development Authority Of India (Third Party Administrators- Health Services) Regulations, 2016.

It is important to note that both surveyors and loss assessors and TPAs are intermediaries who are not involved in the procurement of business or in marketing of insurance.

• Web Aggregators

Insurance web aggregators are insurance intermediaries who are responsible for maintaining a website for providing interface to insurance prospects for price comparison. In simple words, these are the online platforms which provide information on various insurance products offered by different insurers. Consumers with the help of web aggregators can compare and choose policies based on their specific needs. It is mandatory to obtain ‘No objection certificate’ from the authority to act as an Insurance web aggregator.

For example, Bimahub Insurance Web Aggregator Private Limited, Compare Policy Insurance Web Aggregator Private Limited etc. The key regulation for supervising and monitoring web aggregators is IRDAI (Insurance Web Aggregators) Regulations, 2017.

EFFECTIVE TIPS TO DEAL WITH INSURANCE INTERMEDIARIES

Recently, the insurance sector has seen a significant rise in fraudulent activities which has make it even more important for consumers to be vigilant. Fraudulent activities include misleading information, hidden charges, or unauthorized dealings etc. But whatever the case may be, one thing is sure that the risks are real and it can have significant financial repercussions.

Henceforth, to safeguard yourself and make informed decisions, it's important to be aware of some important pointers while interacting with insurance intermediaries. Some of the important tips that are provided by IRDAI on dealing with insurance intermediaries are explained below:

• Insurance intermediary must be authorized and should possess a valid license for the business they are dealing with. For example, if intermediary is selling life insurance or general insurance, then they should possess license for dealing with them. If they are dealing in both, then in that case an intermediary should possess composite license.
• Insurance intermediary should possess a good knowledge of different types of insurance product/policies.
• You should be cautious while buying products/services. Beware of over-selling tactics practiced by the insurance intermediaries and purchase only those products which you can afford. You should understand your commitments of bearing the payment amounts both at the time of purchasing and surrendering the policy claim.
• You should understand the full facts of the product, scope of cover and exclusion if application from the intermediary in detail so that there is no confusion.
• You should see the quality of delivery and timely service which can be easily judged with the conduct of intermediary like his turnaround time during the time they are dealing with you.
• You should understand the terms and conditions of the policy before purchasing one. Never make a hasty decision.
• You should never sign the blank proposal form and should fill it by yourself. If there are any terms and conditions that, are you are unable to understand, then you must immediately clarify the same from the intermediary.
• Whenever you are making premium payments through an intermediary, you should ensure that they are authorized by the insurance company. Additionally, you must request a signed receipt immediately.
• After receiving your policy, you should review it thoroughly and consult your intermediary if any terms are unclear.
• You should ask the intermediary about the necessary documents and procedures for making a claim and fully understand your responsibilities, so that you don’t have to face any problem afterwards.

CONCLUSION

So, in this article, all the major intermediaries in insurance sector were discussed. These intermediaries play a crucial role to facilitate and settle the insurance transactions that takes place between insurance company and policyholders. The indispensable role played by IRDAI intermediaries ensures that interests of all the parties involved in this process are protected. The regulatory authority effectively oversees that these intermediaries operate in ethical and transparent manner. It is expected that as the insurance sector continues to evolve in the modern era, the role of intermediaries will become more significant. This is the only way through which effectiveness and efficiency in the insurance industry is maintained.

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