sold by the sub-broker
The intermediaries who represent insurers are tied agents, corporate agents, banks and micro insurance agents. Since 2010 the insurance regulator has notified distance marketing guidelines, web aggregators' guidelines and modified referral guidelines, which aim to help insurers increase the spread.
The regulator has underlined that no significant steps have been taken to further strengthen the channel of insurance broking, even though insurance brokers are the representatives of the customers.
“It is a fact that there have been reports about mis-selling of insurance products, both in life insurance and general insurance. The complaints on misselling from customers have increased over the years,” says the Irda report on insurance sub-broking.
The committee has recommended that brokers who have completed at least one full financial year can sponsor a sub-broker. It has also clarified that part of a financial year will not be considered while checking the eligibility to sponsor. The degree of consistency in performance, scale of revenues and geographical presence could decide the eligibility of a main broker to appoint a sub-broker. The Irda's decision will be final and the regulator could use its discretion to allow a broker on a case-to-case basis.
“At present, brokers are operating mostly from big cities. It is desirable that we increase the penetration of insurance in semi-urban and rural areas. Sub-broking is one model which can help increase penetration and spread of insurance,” underlines the report. Companies must ensure that their employees and persons who solicit insurance business are competent professionals and adhere to the code of conduct prescribed.
They will have to educate the client on all necessary details of insurance products they seek to solicit and make him aware about his rights and duties. The price quoted will be strictly as per the terms from the insurer and that cannot add any additional pricing to the policy.
The sub-broker will have to make clear communication to the client about the inception of the insurance cover and acceptance of the proposal by the insurer and no endorsement or midterm variations to the policy wording will be arranged without the specific requests