India’s largest distribution network with 1.55 lakh offices has been thrown open to the insurance industry with the industry regulator allowing IndiaPost to sell policies of multiple insurance companies.
This opens a new distribution channel for insurers who have been desperately trying to poach bank distributors from rivals to increase their reach.
Insurers now expect a battle for prime circles, given that the Insurance Regulatory and Development Authority (IRDA) has limited the number of companies that each postal circle can tie up with.
The revised guidelines allow each of the 22 circles of Indiapost to act as a corporate agent of two non-life insurers, two life insurance companies, one agricultural insurance company and one stand alone health insurance company. The regulator has however barred IndiaPost from selling customer data to insurance companies under some referral arrangement.
In its revised guidelines released last week, IRDA said, “Each circle of India post should be treated as a separate unit in order to grant independent corporate agent licence with various insurers.
However the Head of ‘Circle’ may approach IRDA for prior approval of further division in the ‘Circle’ as separate units, in the case of metropolitan areas, to obtain licence to act as corporate agent, in view of the large population under the circle,” said IRDA in its circular.
IRDA has said that the head of the circle would be deemed to be the corporate insurance executive (CIE) — the key executive responsible for all insurance agency dealings.
“Also, all the permanent employees of the India Post having an educational qualification of 10+2 or equivalent shall be deemed to be complying with the relevant provisions regarding requirements of minimum educational qualification, training and examinations prescribed for ‘Specified Persons’.
In this regard, India Post shall take necessary steps to impart required training to its permanent employees to be designated as ‘Specified Persons’ within a period of one year from commencement of corporate agency, IRDA said.
Corporate agency guidelines prevent banks from selling products of two competing firms.
Given the limited number of banks, insurance companies have been struggling to find low-cost institutional distributors with a pan-India reach.
The dispensation will also give the department of posts a new revenue stream. The postal department which had ambitions of becoming major distributors of financial products stopped selling mutual funds of most companies after a ban on front-loads resulted in commissions disappearing
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