Suggestions of Core Group on Distribution Framework

S. Suggestion From Response

No
1 Window of Bhargav
Approval / IRDAI Option – 1

Regarding the window we suggest keeping a window of first month of

each quarter.

Smaller and more frequent window will address the issue of bunching
up of applications and will also give sufficient time to Authority to
address other issues.

Spreading the window over each quarter will ensure that IRDAI will
not get too much regulatory approval burden in one quarter.

Further it will keep the continued rhythm and frequency for industry
and distributors.

Option – 2

Registration window may be kept open for first 15 days of every

month.

This would help achieve greater penetration without any considerable

delay especially when the distributor is ready with business
operations. Prolonged waiting period for the approval window may
delay the entire process and the prospective market participants may
lose interest in the proposition.

2 Vitrak’s will IRDAI As per the current market experience, Corporate Agents (proposed to
work for be CBV) and Broker are either into fulltime insurance intermediation
brokers / business (Broker Model) or carryon other financial services having
corporate substantial customer base (Banks). In both the scenarios, they operate
Vitrak also as a distributor for insurers.
apart from
direct also A distributor should have direct control on the sellers working on their
behalf. One way to achieve the same is to employ these sellers, which
is also the requirement under current regulatory framework. All CAs
and Brokers employ Specified Persons and Broker Qualified Persons to
sell insurance. For the reason captured herein below, CBV and Broker
should not be allowed to tie up with IBV except in employment.

1. CBV & Broker to remain fully responsible for any market

conduct matter.
2. Affords greater control/flexibility over the seller to drive
customer centric behaviour; and
3. Removes any Conflict of Interest - The proposed arrangement
also ensures that there is “no conflict of interest” with other
distribution models like agency. Intermediaries, when allowed
S. Suggestion From Response
No
to tie-up/engage with sellers akin to POS Persons, this
arrangement give rise to unwarranted situation where tied
agent may also be lured to work as POS Person on behalf of
intermediaries, thereby impacting the agency business of the
insurer. A POS Person, when appointed by Broker/CA has
greater flexibility in terms of products availability for
distribution as compared to tied agent who can distribute only
products of one particular insurer in each LOB. To avoid this
conflict, it is proposed that IBV should only be allowed to tie-
up with Insurers. On the other hand, CBV and Broker should
distribute insurance through their Employee Bima Vitrak, who
are working in their full-time employment.
4. The intermediaries, who are themselves distributor, should
not be allowed to further appoint second layer of on contract
distribution. This type of arrangement increases distribution
cost, reduces control and responsibility on the part of the
intermediaries which can give rise to practices adversely
impacting sales quality and accountability towards
policyholders.

3 Transitioning IRDAI CBV - Transition may be smoothened by folding multiple layers (CA,
arrangement IMF, MISP, CSC, WA) in under one umbrella – time of 6 months may be
of existing given.
intermediaries
Broker – Minimal change in broker set up – transition time of 1- 3
months may be given.

POSP – Insurance – transition time of 1- 3 months may be given, for

insurers to fold its POSP in IBV 1 & 2 depending upon qualification and
training requirements.

POSP – Intermediary – Intermediary may be given 3 months to fold its

POSP in EBV depending upon qualification and training requirements.

Overall outer timeline of 6 months may be considered if appropriate.

4 Threshold IRDAI  Complaint should not exceed 10 % of the policies solicited by

quality metrics the intermediary.
for GI  Line of business wise renewal threshold to be defined by
sponsoring insurers.

General insurance policies are annual renewal contracts, and every

renewal is a fresh contract. As per the proposed distribution
framework, Bima Vitraks can solicit insurance business for multiple
insurers and the customer will also have multiple options at the time
of renewal of insurance policies. There may be circumstances wherein
renewal is undertaken by the same intermediary but with different
insurer, which would complicate the assessment of quality metrics
S. Suggestion From Response
No
based on persistency. Further, renewal ratio of general insurance
business is comparatively low. Accordingly, it is suggested that the
renewal thresholds may be defined by the sponsoring insurer based
on the product mix and renewal proportion.

Our suggestion – industry standards, Council may prescribe minimum

standards, insurers may prescribe over and above.
5 Broker IRDAI Shareholding Transfer Agree with Approval for shareholding
regulation Approval Threshold transfer only when there is more than
changes a 50% change
needed Claim Consultancy for Agree with the suggestion
Brokers
Single Client Restriction Remove the single-client restriction
for Brokers.
Single Insurer Business Limit We understand this limit is relevant
for Brokers only for groups containing insurer and
intermediary.

Limit may be removed.

Group Entities with Multiple Limit may be removed
Intermediary Licenses
Removal of the subsidiary The restriction should be removed
condition
Deposit requirements Requirement may be removed
6 IRDAI doesn’t IRDAI The following measures are suggested to implement an effective
want to get
Grievance Redressal mechanism:
into. Strong
internal For customer
company
1. Robust Customer Grievance Mechanism at the first level
ombudsman
and external based on the principal of Treating Customer Fairly.
2. Senior level supervision in case of escalation to GRO.
3. Next Level - Approaching Internal Ombudsman
4. Highest level - External Ombudsman as per ombudsman Rules
2017
For agents / intermediary complaint
1. First level of agent complaint redressal may be at the level of
currently Designated Person.
2. Next steps - Approaching Internal Ombudsman
3. Highest level - External Ombudsman as per ombudsman Rules
2017
S. Suggestion From Response
No
7 Vitrak IRDAI It is submitted that there has been detailed analysis on the number of
categories
Bima Vitrak required in the proposed Distribution Framework. If we
should be 1, 2
or 3 evaluate the proposed Distribution Framework, the customer will
have the following choices to purchase the insurance products:
1. Agent.
2. CBV.
3. Broker.
4. IBV Cat I & IBV Cat II.
Keeping in view the theme of simplicity, we suggest keeping two IBVs
only which sufficiently addresses the following:
1. Simplification; 2. Increasing penetration; 3. Two levels of
progression IBV Cat 1 IBV Cat 2 Agent.
8 Mobility of IRDAI We agree with the suggestion. The parameter to promote IBV Cat 2 to
Vitrak to
Agent is left to be determined by Life and General Council
agents
9 Process of IRDAI The intent is to reduce the efforts of regulatory governance of the
licence: what
intermediaries. While the operational aspects facilitating an apt
papers? How
to make it framework, may be worked upon, the broad pointers are as follows:
online?
• Checklist based Automatic registration with IRDAI.
Minimal
conditions and • Implemented by Tech Platform with assessment / license /
automatic
data monitor capabilities – BIMA SUGAM
• Straight Though Process
• Lesser/defined TAT for seeking registration.

10 Transitioning IRDAI All existing intermediaries will fit in three big buckets,
arrangements
1. Customer representative – Brokers
2. Insurer representative – CBV; which may absorb, CA, IMF,
MISP, WA etc.
3. POSP – will fold in IBV 1 & 2, as insurer representative.

There may not be any restriction for transition amongst CBV / Broker;
any intermediary after having completed at least 3 years in one
category and meeting the minimum renewal criteria may undertake
transition to other category. – clear language CBV-Broker
11 No bar to have IRDAI This could cause layering issue, for more details refer point #2.
another entity
S. Suggestion From Response
No
for agency by
brokers
12 Nothing IRDAI Data Driven Tech Platform – Bima Sugam can address all these
manual should
aspects. We have listed below the areas where Bima Sugam can
be there.
Everything increase efficiency for four important stakeholders of the industry.
through the
Insurer Customer Regulator Distributor
system.
Granular • Sales and • One Stop • Regulatory • Registration,
information. Distribution Solution Reporting Renewal and
Some alert:
exception • Underwriting • Policy • Compliance Monitoring
reports should & KYC Management Monitoring • Sales and Lead
come • Risk • KYC Compliance • Risk-Based Generation
Assessment • Customer Supervision • Training and
• Data Analysis Support & • Consumer Examination
• Fraud Engagement Protection • Product
Prevention • Self-Service • Licensing Information
• Claims Portals and • Customer
Processing • Digital Registration Service
• Customer Documentation • Industry • Compliance
Engagement • Privacy and Data • Analytics and
• Regulatory Security Repository Reporting
Compliance • Regulatory • Insurance • Customer Data
• Product Access Awareness Insight
Innovation • Multiple • Cybersecurit
y and Data
Protection
• E-learning
and Training

13 If the IRDAI The current IBV framework is at par with POS Person, where the
individual licensing requirement is completed by Insurer. Similarly, for IBV also
bima vitraks we propose a similar framework of licensing by sponsoring insurer.
fall under
insurance
intermediaries,
as per the
current
provisions of
the act, they
will have to be
S. Suggestion From Response
No
licensed by
IRDAI. This
would be a
herculean task
for the
regulator....
we may have
to find an
alternative
solution to
address this
effectively