Study group for setting up insurance marketing firm

Working group has been constituted with the chief executive officers of ten insurance companies

The Insurance Regulatory and Development Authority (Irda) today constituted a working group to explore the possibility of introducing an intermediary, called Insurance Marketing Firm (IMF), in the sector .

The working group will also study the report of the Govardhan Committee on distribution channels, which was constituted in 2007, said Irda member (distribution) D D Singh in an order issued on Thursday. It will submit the recommendations by February 28.

The group will study the issue and recommend to the authority on requirement of capital, geographical spread within which the Insurance Marketing Firm can operate and distribution costs among other related aspects of the proposal.

A senior official of an insurance company who is part of the working group said that it still needs to be ascertained whether these insurance marketing firms will have to commit to the business for a certain number of years. "The onus of a policy that has been sold through this new channel will also have to be taken by the Insurance Marketing Firm," the official added.

In a meeting held with insurance executives recently, Irda has looked into sprucing up the insurance distribution channels including new players like insurance marketing firms and tying up with Common Service Centres (CSCs).

The Govardhan committee was asked to look into the strengths and weaknesses of the existing distribution channels of insurance products, namely agency, corporate agency, bancassurance, referrals, direct sales, according to the regulator.

The committee will submit its report by February 28, 2014 to the regulator.