SUCCESS OF CORPORATE AGENTS IN MARKETING OF INSURANCE PRODUCTS
Submitted to: Dr. A. V. Narasimha Rao Visiting Faculty NALSAR - IIRM
Submitted by: Soumya Sukumar R. No: FS10 – 029 ML-FS&CM
• Handles financial matters on behalf of the client on
which they get paid a certain amount known as the
• The corporate agent is a trust company that receives specifically assigned rights and privileges from the corporation or government entity.CORPORATE AGENT
• Corporate agents function as agents for various types
of businesses or for a government agency.
• A regional rural bank established under the Regional Rural Banks Act.
• A company formed under the Companies Act. 1976. • A co-operative society/ a co-operative bank. 1912. registered under the Co-operative Societies Act.CORPORATE AGENT
• A firm.
• A banking company as defined under the Banking Companies Act. 1956. 1949.
• A panchayat or a local authority.
• Any other institution or organisation which is specifically
approved by the Authority. 1912 or a Non Banking Financial Company registered with the Reserve Bank of India. • A Non-Governmental organisation or a micro lending
finance organisation covered under the Co-operative
Societies Act. • “Composite Corporate Agent” means a Corporate Agent who holds a licence to act as an insurance agent for a life insurer and a general insurer.
• If the applicant. wants to be a composite corporate agent he shall make two such separate applications. The applicant shall make an application to the designated person in Form IRDA-Corporate Agents-A-1.
• An applicant desiring to obtain or renew a licence to
act as a corporate agent or a composite corporate
agent shall proceed as follows:• 1.
The fees should be paid by the applicant.
• 3.• 2.
• Once the application along with the receipt of the payment is obtained by the designated person.
. he may grant or renew. Has passed the examination as specified. Possesses the practical training. a licence in Form IRDA-Corporate AgentsL-1 on being satisfied that the corporate insurance executive of the applicant:• 1. Possesses the qualifications required.
Is capable of providing the necessary service to the policyholders.
• If there is a delay or he rejects the applcation he should
inform the applicant about it giving valid reasons.• 4. • 6. Has the knowledge to solicit and procure insurance business.
• 5. • Period: Grant or renew within 3 months from the date of application. Has furnished a complete application in all respects.
. [5 years elapsed] • 4. Unsound mind.QUALIFICATIONS
• The Corporate Agent should ensure that one of their main objects is to procure “insurance” business as a Corporate Agent. Criminal. Fraud.
• The corporate insurance executive must be a 12th pass if he resides
in a place of a population of 5000 or more OR a 10th pass if he resides anywhere else. • 3. Minor. dishonest or misrepresents. • 2. • Shall not possess any disqualifications which are: • 1.
An Associate/Fellow of the Insurance Institute of India. An Associate/Fellow of the Institute of Chartered Accountants of India.PRACTICAL TRAINING
• The corporate insurance executive must have at least
100 hours of training spread over 3 to 4 weeks in either
Life or General as the case may be.
. • Where the CIE must be any one of these: • 1. • 2.
. • 7. • 4.
• 6.• 3. A Master of Business Administration of any Institution/
University recognised by any State Government or the Central Government. • 5. Possessing Certified Associateship of Indian Institute of Bankers (CAIIB). An Associate/Fellow of the Institute of Company Secretaries of India. An Associate/Fellow of the Actuarial Society of India. An Associate/Fellow of the Institute of Costs and Works
Accountants of India.
• EXAMINATION • The CIE must write the pre-recruitment examination conducted by III or any other body recognized by the IRDA. • On passing such examination a certificate must be issued. Possessing any professional qualification in
marketing from any Institution/ University recognised
by any State Government or the Central Government.• 8.
1938. 500 should be paid to the authority.
. • To obtain Certificate: A sum of Rs.
• Every specified person shall be an employee of the
corporate agent.FEES AND REMUNERATION
• For issuing or renewal of license: A sum of Rs. • Every Corporate Agent shall be paid a commission as per provisions of Section 40 A of The Insurance Act. 250 should be paid to the authority.
• Despite having such stringent rules and regulations the corporate
agents to earn profits the corporate agents have been violating the code of conduct time and again by practicing Multi level marketing. Demand or receive a share of proceeds from the beneficiary under an insurance contract. terms and conditions other
than those offered by his insurer. • 2. Solicit or procure insurance business without holding a valid licence/ certificate. Offer different rates.
• 3. advantages.CODE OF CONDUCT
• No corporate agent/ corporate insurance executive/ specified person shall: • 1.
MULTI LEVEL MARKETING
• Multi-level marketing (MLM) is a sales system where an agent earns commission not only on sales effected by him but also on the sales of each agent he recruits. • IRDA has come across instances where the MLM companies have
been positioning themselves as insurance providers instead of
insurance distributors. though at a smaller rate. • The best example of MLM company is Amway.
. • The chain of commissions continue with the agent on top of the
pyramid getting a small share of commissions from all the agents
down the chain.
. • This concept of earning overriding commission is not accepted in the insurance business.• The main deficiency is that the system is not structured to reward
• The number of corporate agents is still reducing and is dying a slow death. • Thus from a couple of years we have seen that the IRDA has cancelled many licenses of such corporate agents and the number
has reduced drastically. • Rather it focuses on encouraging agents into recruiting more agents under them so that they can earn an overriding commission.
• The Company sourced its business through Multi Level Marketing through persons who do not possess any certificate / License issued under Licensing of Corporate Agents Regulations.
• According to the Guidelines the Company shall not charge an administration fee. service charge. it is observed that the Company has charged a processing fee . or any other charge to the policy
holder insured through it. • It is also observed that commissions are paid to the persons other
than specified persons.Rose Valley Chain Marketing System Ltd.
. 2002. But as per evidences available with the
Authority.joining fee and admission fee.
which is collected for onward transfer to their real estate business books. this contention is not supported by relevant documents.• The corporate agent denied the charge and stated that their objective is to
penetrate into market with vast network and that they were in the process of appointing more Specific persons to sustain the pressure of their volume of business. It will not be in interest of policyholders for M/s Rose Valley Chain Marketing System to continue to function as corporate agent.
. • Thus it was established regarding the facts and documents of the case that the charges made against the corporate agent stand established. • Also the corporate agent contended that the joining fee mentioned therein pertains to membership fee of land clubs. • However.
• But it was evident from the main objects clause of their MOA which
includes chain marketing as one of their main objects.
Reduction of Corporate Agents
18.104.22.168.33.00.000 GENERAL 6.000 48.000
45.76.75.000 33.000 422.214.171.1240 2010 .000 4.52.000 290.73.54.000
4.71.2009 2009 .000 255.94.2009 2009 .2011
*Values rounded off
241.68.Commission Of Corporate Agents Through a few Insurance Companies
YEAR 2008 .2010 LIFE 126.96.36.199.76.44.
390.2010 2010 .Comparison with other Players RELIANCE
YEAR 2008 – 2009 2009 .375
• Be persistent and do not pester. • Keep in touch. • Follow all the rules and regulations. • Follow up as quickly as possible.
• Ask for feedback.
• To put themselves in the shoes of their clients. • Treat the clients as first priority. • Don’t settle for mediocre. • Be their guide.
• The future seems bleak and a lot of effort will have to be
put in to getting them back on their feet. • Also MLM is the only way they can earn huge profits and
this will continue to happen.
• The concept of corporate agency is dying a slow death. • Since 2010 the regulations have been made more stringent because of which many corporate agents quit.
• The insurers are also starting to prefer other channels over this.