What is an Insurance Marketing Firm? An Insurance Marketing Firm or an IMF is a business entity licensed by the Insurance Regulatory and Development Authority of India (IRDAI) to solicit, procure and market insurance-related products and services in the market. It is an insurance distribution medium.
Only a business entity can be an IMF; you cannot get an IMF license as an individual. An insurance committee proposed the idea of an IMF in 2007. A registered Insurance Marketing Firm can sell insurance services from different insurance companies.
Still, they have to adhere to strict guidelines put forth by the IRDAI to regulate such marketing entities.
Here, in this article, we will describe the pre-conditions that an applicant company must observe before filing for the registration of their firm as an Insurance Marketing Firm.
Along with the IRDAI, the Government of India has prescribed some specific requirements for procuring the license to ripe the benefits of an Insurance Marketing Firm. Read More: Nidhi Company Registration
Corporate Structure of the IMF
The applicant must be one of the following to register for an Insurance Marketing Firm license.
- A Company registered under the Companies Act of 2013 or the Company Law of 1956;
- A partnership firm registered under the Partnership Act of 1932 or the Limited Liability Partnership Act of 2008;
- A co-operative society registered under the Co-operative Society Act of 1912; or
- Any Company authorized to conduct business related to an Insurance Marketing Firm.
Minimum Capital Requirements
The applicant company must satisfy the following capital requirements to register for an Insurance Marketing Firm Licence:
- The applicant company’s net worth must be INR 10 lakhs or more.
- If the geographical scope of the proposed Insurance Marketing Firm is in a particular district, then the net worth requirement is INR 5 lakhs or more.
- The applicant company must maintain the net worth requirement at all times. For this, CA-certified certificates must be submitted by the IMF periodically within three months of closing the financial year.
Foreign Holdings restrictions
The to-be IMF must ensure that its foreign holdings by any foreign investor(s) must not exceed more than 49% of its paid-up equity share capital. The authority will calculate the foreign equity holdings of an IMF during the inspection.
Appointment of the Principal Officer
A principal officer, appointed by the company’s top executives, is responsible for all the major activities of the Insurance Marketing Firm. The officer is chosen for the job for his specific qualifications, which aid him/her in dispensing their duties. Below is the list of required qualifications that a Principal Officer must possess.
- A principal officer must be an Associate or a Fellow of the Insurance Institute of India, Mumbai; or
- A principal officer must be an Associate or a Fellow of the Institute of Actuaries of India; or
- A principal officer must be an Associate or a Fellow of the Chartered Insurance Institute, London; or
- A principal officer must be a postgraduate from the Institute of Insurance and Risk Management, Hyderabad; or
- A principal officer must be a Graduate in Insurance with experience of five years preceding the year in which the application is made; or
- A principal officer must be a Graduate with ten years of experience in the financial services sector preceding the year in which the application is made.
In addition to the required qualification, the principal officer must satisfy the training requirements set forth by the IRDAI.
The top executives of the IMF, say director(s), principal officer(s), and shareholder(s), must satisfy the FIT and PROPER criteria and not be disqualified under law.
Nomenclature of the company
Every registered IMF must have the words’ Insurance Marketing Firm’ in its legal name. This will convey the firm’s authenticity to the customers and insurance companies. Read More: Section 8 Company Registration
Working Condition
The applicant company must have the necessary infrastructure, such as adequate office space, equipment, trained manpower, and IT infrastructure, to discharge its duties as an Insurance Marketing Firm effectively.
Purpose of the Business
The main objective of the applicant company’s business must be insurance marketing. And it should be specifically mention in the objects clause of the Articles of Association (AOA) and the Memorandum of Association (MOA). The activities of an insurance marketing firm must be according to the set of activities approved by the authority. Otherwise, the license stands to be cancel.
Previous Refusal
The applicant company must not have been refused the registration for Insurance Marketing Firm Licence in the past.
Certification Requirements of Insurance Sales Person (ISP)
- An Insurance Sales Person must satisfy the certification and training requirements.
- Insurance Sales Person marketing insurance products related to life, general, and health insurance must have a valid certificate.
- An Insurance Sales Person must have undergone IMF training and passed the examination conducted by the authority.
- The training requirements for an ISP and PO are the same.
To register your company as an Insurance Marketing Firm, the applicant has to observe the pre-conditions set forth by the IRDAI. Read the article to know more. Read More: Trademark Investigation in India: How to avail of services?
