Insurance Business

Guide to starting an IRDA Insurance Marketing Firm

The term “Insurance Marketing Firm” has been adopted in India by the Insurance Regulatory and Development Authority of India (IRDA) under the IRDA Registration of Insurance Marketing Firm Act 2015. An organisation registered in India called an “IMF” is authorised to solicit or procure insurance products, undertake insurance services, and distribute other financial products. The insurance industry is expected to have strong development in the future years as a result of the Government of India boosting the FDI limit in insurance, and those looking to launch an insurance firm have a tonne of opportunities. Establishing an insurance marketing firm, as stated in regulation 3(a) of India’s insurance regulating and development authority, is necessary to conduct insurance service operations. A new business model and channel of distribution for the insurance industry is the IMF. A group of businesses was established to promote the goods associated with the selling of mutual funds and insurance. The primary objective, aside from this, was to market financial services, pension plans, and stocks. This blog will discuss starting an insurance marketing firm in India.

Insurance Marketing Firm

According to the Registration of IMF Regulations, 2015, an “IMF” is defined as a registered entity by the IRDA to solicit or obtain insurance products, engage in insurance service operations, and distribute other financial goods. To enable business owners and insurance agents to launch their own insurance distribution organisation, the IRDA has permitted the registration of insurance marketing firms.

Insurance marketing firms provide similar services related to an insurance distribution firm. An organisation that wants to act as an insurance firm must obtain a licence. Insurance marketing businesses must work closely with insurance companies to advertise their products. The applicant must be a company, LLP, cooperative society, or any other recognised entity to be eligible to get an IMF licence. An individual cannot operate a marketing agency for insurance.

Insurance marketing companies employ Insurance Sales Persons (ISP) who conduct marketing and solicitation tasks on their behalf. A financial executive sometimes referred to as a financial service executive(FSE), is also hired by an insurance firm. These executives are in charge of promoting and soliciting non-insurance items that are subject to different regulatory bodies.

Eligibility Criteria for Starting an IMF in India

The applicant must be a Ministry of Corporate Affairs-registered business entity. The applicant must be a private limited business, an LLP, or an OPC.

• A qualified principal officer should lead the applicant organisation.
• An experienced Financial Service Executive should work for the applicant organisation.
• The organisation applicant should have an Insurance Sales Person (ISP).
• The applicant organisation’s net value must be at least 5 lakh rupees to operate a single IMF branch. The net worth for multiple branches must be at least 10 lakh rupees.
• IMF or Insurance Marketing Firm terms should appear in the applicant’s organisation name.

It is crucial to provide the appropriate eligibility criteria for the IMF licence in order to demonstrate that the applicant satisfies the aforementioned eligibility requirements.

Capital Requirement

To apply for a licence as an IMF, a candidate must satisfy the capital requirements listed in Regulation 6 of the IRDAI (Registration of Insurance Marketing Firm) Regulations, 2015.

• Net Worth – The applicant’s net worth cannot be less than Rs. 10 lakhs.
• The applicant’s net worth must be at least Rs 5 lakhs if they are requesting permission to operate as an insurance marketing firm in a specific district.
• The applicant is required to maintain the company’s net worth at all times. Within three months of the end of the fiscal year, a certificate certified by a chartered accountant must be presented for this purpose.

Documents Required

These are the following required document which is necessary to start Insurance Marketing Firm in India: 

1. Certificate of Incorporation – The incorporation certificate proves the applicant’s status as a legitimate business entity.
2. The applicant’s LLP agreement of an LLP: Applicant who is applying as a Limited Liability Partnership, this is a crucial document to provide.
3. Articles of Association: It sets forth the rules and restrictions that the company adheres to.
4. Qualifications and information of the Principal officer: It is necessary to provide the full details of the principal officer.
5. Memorandum of Association: This document outlines the firm’s goals; it must be specific and should make it clear about the services the company offers.
6. Information on the insurance salesperson and their qualifications: The insurance salesperson must have passed the IRDA examination.
7. Bank account statement: The applicant entity’s bank account statement must reflect the net worth of the company.
8. Qualification and details of FSE: Each IMF that has employed a Financial Service Executive is required to give information about their qualifications and employment history.
9. Certificate of the business entity’s net worth: The applicant’s net worth must be sufficient to start the business.
10. Three-year business plan: To maintain the business, the applicant must have a three-year business plan.
11. Photographs of the manpower and tools: Show off through photographs all the personnel, equipment and tools you have in the company.
12. Letter of authorisation from the insurance companies Consent letter of insurance companies that the applicant proposes to work with.
13. Information about IMF infrastructure: Give detailed information on the organisation’s management structure for the marketing firm in insurance.
14. Undertaking by the Principal officer: The Principal officer is responsible for ensuring that all the information he has provided is accurate. Only in that manner can an IMF licence be obtained.
15. Administrative Projections: The relevant account, the profit and loss account, and the balance sheet are projected for the following three years based on projected administrative costs, salaries and wages, and other expenses.
16. Organisation Chart: A complete image of the company’s operations, including IT, risk assessment, claim settlement, marketing, accounts, and back office, should be provided in the organisation chart.
17. Any other services: Any other details pertaining to the type of services provided by the applicant for the expansion and marketing of the insurance firm.
18. Any other requirements that the authority deems necessary.
19. The application form must be signed by two directors.

The IRDA has established standard requirements for the documentation of insurance marketing firms. As a result, you must ensure that all the provided documents which are listed are accurate and compliant with the department’s rules and regulations.

License for IMFs

The authority will issue a registration certificate in Form B if it considers that all the necessary information complies with the Insurance Marketing Firms licence. The insurance firm applying for a certificate of registration may also apply for any other category of services under the IRDAI.

Process in Registering Insurance Marketing Firm

These are the documents to be submitted by the applicant for registering an IMF in accordance with regulation 4 of the IRDAI (Registration of Insurance Marketing Firm) Regulations, 2015. The insurance firm registration process is not a quick process. These are the procedures for setting up a marketing firm in insurance.

• The first step is to compile the necessary documents and have a qualified signatory certify them.
• Complete the registration form for an insurance marketing firm. The official portal can be used to complete the process online.
• The necessary documents must be uploaded in order to submit. However, diligence must be used to ensure that the uploaded attachments are accurate and of good quality.
• After the application has been filled, you must carefully monitor it to make sure you have time to address any discrepancies that may come up as it is being processed.
• The Insurance Marketing Firm’s exam pass certificate must be submitted with the application. The principal officers and directors of the insurance marketing firm will be listed on the certificate of exam clearance.
• In addition, the authority should receive a copy of the employee’s surveyor and loss accessor licence if they work for an insurance marketing company.
• Get the certificate of registration by following the aforementioned procedure.

Consulting with specialists will guarantee that the IRDAI registration^[1] process is simple and helps you to receive a licence quickly.

Validity of Licence

An insurance marketing firm’s licence is valid for three years. A company that promotes insurance cannot operate with an expired certificate.

Conclusion

From this, it is understood the applicant should submit an application to the IRDA in the form provided for registration as an Insurance Marketing Firm after the aforementioned qualifying requirements are met. If the application and applicant are approved, the IRDS will grant registration. It takes a while to register an insurance marketing company. Consult with specialists to guarantee that the IRDA registration process is simple and that you receive your licence soon.

Also Read: Registration Renewal Process of Insurance Marketing Firm