The Insurance Regulatory and Development Authority (IRDA) on Tuesday cancelled the licences of 4,261 corporate agencies that sell life/general insurance products as they did not apply for renewal of their licenses (pending since March 31), either because of new tie-ups with insurance companies or changing the model to referrals that don’t require licence.
“All these corporate agency licences have been withdrawn from our database,” the IRDA circular stated. “Insurers and general public are hereby cautioned not to transact any insurance business through them.”
“The agencies did not come for renewal and their licences have been withdrawn,” IRDA chairman J. Hari Narayan said.
According to IRDA regulations, the licensing agreement of a corporate agent with an insurance company is for three years. After this, the agency may look for a new partner or even sell a product under the referral model (for which no licence is required).
“We have not renewed our licence as we have entered into a referral arrangement,” said an official with a bank that acts as a corporate agent.
Experts say the referral model is simpler. “The licence arrangement also has some stringent norms,” said a senior official with a corporate agency who did not wish to be named.
But in case a corporate agency cancels its arrangement with an insurer and enter into agreements with other insurers, then the question of who services the old customer for the insurance product sold arises.
“The old customer does not get impacted as IRDA has a guideline for that,” said an official with another corporate agency that did not renew its licence. “In such cases, we have a dedicated person taking care of all queries in relation to the old insurer and that person then forwards it to a designated person in the insurance company for the same.”