IRDA tightens the norms for transfer of Corporate Agents

IRDA has, vide its circular dated June 07, 2010 (“Transfer Circular”) tightened the norms for transfer/appointment of the corporate agents. It may be noted that by an earlier circular dated September 09, 2009, IRDA had stipulated a strict procedure to be followed before the insurers could issue a “No Objection Certificate” to a corporate agent desirous of moving with another insurance company.

For the purposes of bringing uniformity in the procedure for processing of applications for transfer of corporate agency, the Transfer Circular provides as follows:

1. The decision to appoint a person holding a valid license as a corporate agent in case of transfer from another insurer will be taken only in the corporate office of the insurance company.

2. The appointment of a corporate agent can be made only by the CEO, CFO or chief marketing/sales officer, chief of channel operations or any other officer, designated by the board of the insurer for making such appointment. Such designated officer shall carry out a due diligence on the corporate agent and record its findings while taking the decision to appoint the corporate agent. Further, such designated officer shall also gather, from available sources, the reasons that led to the discontinuance of the corporate agency of the corporate agent with the previous insurer, and record the same.

3. Under the September 2, 2009 circular, before issuing a no objection certificate for transfer, the insurer is required to inform all its policyholders, being serviced by the transferring corporate agent, of the details of the arrangements made for servicing such policyholders, including the details of the new officers in-charge for servicing them. The designated officer of the new insurer is required to ensure that the corporate agent has fulfilled the said condition.

4. The designated officer is required to obtain the periodical returns of the corporate agent for at least two preceding financial years, before appointing such corporate agent.

5. It shall be the responsibility of the designated officer to ensure that the corporate agent complies with all the relevant provisions of the Insurance Act, IRDA Act, 1999 and regulations/guidelines/instructions, issued by the IRDA from time to time.

Lastly, the Transfer Circular requires all the insurers to provide IRDA with the details of the officer required to be designated under this circular (as detailed in paragraph 2 above), before June 30, 2010.