Corporate Arms Spring Up To Sell Life Covers

The delay in amending the Insurance Act 1938 to permit sale of policies by corporate agents has forced corporates to set up subsidiary companies to vend life insurance covers.

All the directors of such subsidiaries are meeting with the insurance regulations in terms of training and passing examinations to act as an agent for an insurance outfit.

Life insurance players are in advance talks with direct sales agents to act as their corporate agents for the sale of products.

HDFC Standard Life Insurance Company has tied up with Blue Chip through the latter's subsidiary, Standard Insurance Distribution which has six directors trained to sell insurance products.

 

Similarly, HDFC Standard Life has tied up with Quantum's subsidiary -- Personal FN Insurance Services.

Other new insurance players -- ICICI Prudential Life Insurance, Tata AIG Life Insurance and Royal Sundaram Life Insurance -- are in talks with a number of similar direct marketing and sales agents -- Frontline Sales, Real Touch, JNJ Marketing -- to appoint them as their corporate agents.

These outfits have a captive market in terms of selling fixed deposits, credit cards and other retail financial products.

"We are talking to a couple people who operate in the financial services sector," said ICICI Prudential Life's CEO and managing director, Shikha Sharma.

The present trend among life insurers follows the suggestion made by the regulator to tap the subsidiary route for selling insurance products via corporate agents.

The Insurance Regulatory and Development Authority (IRDA) has recommended that an entity keen to sell products as a corporate agent for an insurance company could surpass the existing hurdles and float a separate subsidiary for the purpose.

Under the existing IRDA Act, all the directors of the corporate agency need to sit for the 100 hour training programme and pass the necessary agent examination.

By circumventing the existing Act, "corporate agents can start operations today if they satisfy the regulations", IRDA chairman N Rangachary had told Business Standard earlier.

He further added that there is no need to wait for parliamentary amendment to the Insurance Act. The necessary amendment was to be put up to the parliament during the budgetary session.

On account of the Tehelka tapes controversy, it is expected that the issue will be put up during the monsoon session.

However, as the maximum possible number of directors in any private limited company is 12, this route has its limits.

For instance, Blue Chip has 30 offices, but with only six directors on the board of its subsidiary, sales are limited. Nevertheless it is a start said one insurance outfit.

"We can better understand the selling process and address these issues as and when we scale up in terms of the size of reserves to be built, the back-office set-up, the marketing and training requirements", said the official.