An agent is person who lawfully represents the insurance company and has the authorization to move on the insurance companies behalf. In contrast, a agent is person who lawfully represents the insured.
Govt. of India decided to ship on economic reforms in the 1990s. The bid and command economic system bit by bit gave manner to market economic system in sector after sector, including the fiscal sector which comprised “ Insurance ” sector. Assorted reforms were initiated in the fiscal sector. The economic system responded positively to the reforms. Competition in the fabrication sector geared it up to put in engineering, restructure its operations, cut down cost, achieve improved productiveness, bring quality of merchandises to international criterions. Newspaper Articles started foregrounding the success narratives of several endeavors in the Open Market Indian Economy to show what could be achieved in a liberalized market economic system.
Along with fiscal sector reforms, there were many reform steps by the Govt. for the insurance sector. Insurance Sector Reform Measures initiated by the Government were based on the Report of the Malhotra Committee, which submitted its Report in 1994. The chief observations of the Malhotra Committee were:
There was barely any worthwhile competition in the insurance sector ;
With progressive decrease in the bureau committee construction there was no range for any well informed or trained calling bureau organisation to emerge ;
The lone Government Companies in the insurance sector resorted to naming salaried development officers to sell its insurance screens which resulted in turning staff load and attendant jobs ;
The service facet suffered and client satisfaction was a casualty. Insurance consciousness did non leach and distribute.
The Malhotra Committee, hence, among other things, recommended:
Opening of insurance industry to competition. Apart from doing the four runing Government Companies in general insurance independent, other private participants to be permitted ;
Creation of a Regulatory Authority for supplying a flat playing field to all entities runing in the state ;
Development of an efficient and professional selling construction to distribute the message of insurance, better service and client satisfaction ;
Introduction of Broking Firms who would move as professional mediators as in other established markets.
Insurance Regulatory Authority was established as an Interim Regulator in 1996 and became a fully fledged statutory Insurance Regulatory and Development Authority ( IRDA ) in 1999 with the passing of IRDA Act of 1999 on 19th April 1999.
Thereafter, IRDA enacted assorted Rules and Regulations and ushered in reforms in insurance sector. One of them is the Insurance Regulatory and Development Authority ( Insurance Brokers ) Regulations, 2002 w.e.f. 16.10.2002. Subsequently, 185 Insurance Agents have obtained license from IRDA and have started their broking operations puting immense capital, with the exclusive intent of rendering professionalized service to the insurance purchasers.
This background will edify the readers and the insurance purchasers on why they truly need to utilize the services of insurance agents for purchase of insurance coverages.
Exhibit: Insurance Intermediaries – A Conventional
Key/ Formal Insurance mediators include:
Insurance Agents – Primary to insurer ‘s involvement ( face of insurance company ) . Can non stand for multiple insurance companies hence are “ trussed ” to an insurance company. Practical preparation and passing of test is compulsory and sponsored by one insurance company. Discourages exchanging of insurance companies. ( See ‘Annexure A ‘ of the Chapter for inside informations )
Agents – Primary to see ‘s involvement. Can stand for multiple insurance companies to supply suited merchandises to the insured. IRDA has formulated ordinances regulating insurance agents.
Surveyors and Loss assessors – To analyze the claim and measure the existent loss suffered. To subject a study for the consideration of the Insurance Company.
Third Party Administrator – Arises chiefly out of monaged wellness attention concern. Merely “ companies ” registered under the companies act, 1956 are allowed to move as TPA. IRDA is finalising ordinances regulating TPAs.
Reinsurance Broker – Link between insurance company and reinsurance organisations. Incentivized by the re-insurer for one-year pacts and facultative trades.
Co-operatives – Reach in rural countries. Rural public more comfy while covering a co-operatives.
Statisticians – Provides actuarial advice to the direction. Assurance to IRDA.
IT System Provider – indispensable support for all new insurance cos. IT system back bone of the operations.
Rating Agencies – Americium Best, Standard and Poors, Moodys.
Any other individual helping and stand foring an Insurer in any of the followers.
Soliciting negotiating, securing or set uping an insurance contract or its reclamation.
Circulating information associating to coverage of rates.
Forwarding an insurance application.
Servicing and presenting an insurance policy or contract.
Inspecting a hazard.
Puting a premium rate.
Investigating or measuring a claim or loss.
Transacting a affair after implementation of a contract.
Representing a affair after implementation of a contract.
Representing or helping an insurance company or other individual in any other mode in the dealing of insurance contract.
Servicing a policy or contract.
“ The entire intermediation equation has to be right to be a successful insurance company
in the new environment ”
Agents and Agents are independent insurance sales representative who represents peculiar insurance companies but besides might work as a agent by seeking the full insurance market to put an applier ‘s coverage to maximise protection and minimise cost. This individual is licensed as an agent and a agent.
Developing a long term relationship with an insurance professional is a cardinal measure in the development of a concern insurance program. The line that separates the difference between an agent and agent is a bleary 1. Both an agent and a agent have the ability to beg insurance quotation marks that will adequately protect your concern, but the manner they go about it is a small different.
An agent is a individual who has entered into an ‘agency contract ‘ with an insurance company for the intent of selling insurance for that company.
The Insurance Act defines an Insurance Agent as one who is licensed under Section 42 of that Act and is paid by manner of committee or otherwise, in consideration of his soliciting or securing insurance concern associating to the continuation, reclamation or resurgence of policies of insurance. In other words, insurance agents are insurance professionals that serve as an mediator between the insurance company and the insured. An agent is non an employee of the insurance company, but instead an independent contractor. The agent, unlike a agent, has the authorization to adhere coverage ( lawfully obligate the insurance company to supply coverage harmonizing to the footings and conditions as edge ). As a wide statement of jurisprudence, an agent ‘s liability to their clients is administrative.
That is, agents are merely responsible for the timely and accurate processing of signifiers, premiums and paperwork. Agents have no responsibility to carry on a thorough scrutiny of your concern or to do certain you have appropriate coverage. Rather, it is your duty to do certain you have purchased needed coverage. An agent that hires more than one individual to serve their policyholders is called an bureau. An bureau consists of two or more people, normally a combination of accredited persons along with support staff. Large bureaus may hold an bureau contract with more than one insurance company. However, maintain in head that an agent is a representative of the insurance company ; hence premium payments made to the agent is tantamount to remitting payment to the insurance company. Agents must successfully go through their province ‘s Property Casualty licencing test in order to carry on concern as an agent.
Types of Agents
Captive/ Tide/ Individual/ Exclusive – An agent who solicits concern for arrangement with the peculiar insurance company they have an understanding with. These type of agents will sell policies merely for that insurance company.
Independent/ Non-Exclusive – An agent who has bureau contracts with more than one insurance company. An independent can bring forth policies from several insurance companies and offer some comparings of different insurance policies. These types of agent realize nevertheless, no affair which company they use to see your concern, they still represent the insurance company.
Alternate Agents – When the organisation acts as an agent.
Absorbed Agents – Agents before the formation of IRDA. Example ; earlier agents of LIC
Composite Agents – Agents who are working for both, life and non-life. These agents will hold to take licences individually for both after undergoing the preparation and glade IRDA insurance scrutiny for life and general insurance agents.
A agent is a individual or house that has permission to seek insurance citations for an insured ( client ) or prospective client. A agent is non an insurance company employee. As a representative for the insured, agents will near several insurance companies in an effort provide citations and coverage to adequately see the client ‘s exposures. Agents are required to hold a agent ‘s licence which typically means the agent will hold more instruction or experience than an agent.
Duties of a agent – They have a higher responsibility, in most provinces, to their clients.
Agents have the responsibility to analyse a concern and secure correct and equal coverage for the concern which is a higher responsibility than the pure administrative responsibility of the agent. However, this expertness comes at a monetary value. Brokers typically charge an administrative fee or premium payments are higher when purchased through a agent.
The agent will determine the client ‘s demands, gather information and subject the information to several insurance companies.
Agents do non hold the authorization to adhere coverage. They present the information and if the insurance company agrees, the insurance company will adhere the coverage.
Once the coverage is bound, the insurance company, non the agent, will publish grounds of coverage in the signifier of a binder. A binder is an insurance sum-up that outlines the coverage bounds, footings, conditions and premiums that the company agrees to supply.
The agent ‘s fee or committee is built into the insurance premium. The client is to the full cognizant of how much their agent earns as the agent must unwrap their committee to and acquire written consent from their client.
Large insurance securities firm houses have the ability to procure coverage for every type of hazard. They tend to compartmentalise the coverage to supply experts in each field of insurance. For illustration, larger houses have sections to manage air power hazards while their opposite number can manage workers compensation. Smaller concerns may non necessitate the degree of compartmentalisation and specialisation that larger securities firm houses offer. To that terminal a smaller securities firm house or an single agent may be equal for their demands. They besides have the ability to offer a more individualized service that a little concern might prefer.
To go an insurance agent, an single must successfully go through their province ‘s Property Casualty licensing test. Both agents and agents must go through the same licensing test in order solicit or sell insurance, but their point of commitment differs. One represents the client and the other the insurance company.
Why Insurance Agent?
Insurance agent represents the insurance purchaser, and non the insurance company ( insurance marketer ) , though the wage of insurance agent is paid and borne by the insurance companies. There is no extra cost to the insurance purchaser for puting concern through insurance agent.
Insurance agents have been introduced into the Indian market by insurance regulative and development authorization ( IRDA ) as professionals, who will truly represent and service the involvements of insurance purchasers.
Insurance agents have qualified and experienced insurance experts and can purchase insurance for their client ‘s at the most competitory premium rate and footings.
Insurance agents provide a bundle of services to the insurance purchaser, including post-insurance services every bit good as helping in entry of claim paperss to insurance company. Please see annexure for maps of insurance agents.
Insurance agents have to obtain license from the IRDA before they carry on insurance broking in India and the operations of insurance agents are monitored and controlled by IRDA a transcript of codification of behavior prescribed by IRDA for insurance agents is enclosed.
Insurance agents are different from insurance agents. Insurance agents represent a given insurance company, and non the insurance purchaser. Therefore, insurance agents sell the insurance policies of a given insurance company, taking attention of the involvements of the insurance company ( insurance marketer ) , and non of the insurance purchasers.
Insurance agents are professionals and stand for the insurance purchasers merely, and non the insurance company. Insurance agent can put the insurance of his client with any insurance company, in the best involvement of the insurance purchaser. Therefore, the insurance agent is a individual window solution for all insurance jobs of the insurance purchaser with all insurance companies.
Importance of the function of insurance agent in the emerging scenario of ‘detariffing ‘:
Who is an Insurance Intermediary?
An Insurance Intermediary means single agents, corporate agents including Bankss and agents -they intermediate between the client and the insurance company. Insurance Intermediary besides includes Surveyors and Third Party Administrators but these mediators are non involved in procurance of concern. Surveyors assess losingss on behalf of the insurance companies. Third Party Administrators supply services related to wellness insurance for insurance companies.
Who is an Agent?
An agent is a individual who is licensed by the Authority to beg and secure insurance concern including concern associating to continuance, reclamation or resurgence of policies of insurance. An agent could be an Individual Agent or a Corporate Agent. An Individual Agent, as the name suggests is an person who in an intermediary stand foring an insurance company while a corporate agent is an intermediary other than an single, stand foring an insurance company.
What does Designated Person of a Corporate Agent intend?
A Designated Person means an officer usually in charge of marketing operations, as specified by an insurance company, and authorized by the Authority to publish or regenerate licenses under the applicable ordinances.
Who is a Composite Insurance Agent?
A Composite Insurance Agent means an insurance agent who holds a license to move as an insurance agent for a life insurance company and a general insurance company.
Who is an Insurance Broker?
An Insurance Broker means a individual licensed by Insurance Regulatory and Development Authority who arranges insurance contracts with insurance companies on behalf of his clients. An Insurance Broker may stand for more than one insurance company.
What is the difference between an “ Agent ” and a “ Broker ” ?
While an Agent represents merely one insurance company ( one general, one life or both if he is a composite agent, apart from a wellness insurance company ) , a Broker may cover with more than one life or general or both.
Are “ Surveyors ” and “ Third Party Administrators ” besides Intermediaries?
Surveyors and Third Party Administrators are besides termed as Mediators but they are non involved in selling of insurance.
Are “ Agents ” and “ Agents ” required to be licensed?
Yes. Agents and Agents have to be licensed by the Insurance Regulatory and Development Authority ( IRDA ) for life insurance or general insurance or both. They besides are bound by a Code of Conduct laid down in the several ordinances.
Can the Intermediary give me a price reduction on the premium I am supposed to pay?
No intermediary can offer any price reduction to you to bring on you to take the policy. If any such incentive is resorted to, it is in misdemeanor of Section 41 of the Insurance Act, 1938 and all parties involved would be capable to prosecution as provided by the Law. Any price reduction on premium you receive would be merely in footings of what the policy allows and it is given by the insurance company.
Courtesy: Handbook on insurance mediators. hypertext transfer protocol: //policyholder.gov.in
Skill set of agent and agent
Primacy to Insurer ‘s Interest
Practical Training and Passing of Examination is compulsory and sponsored by one insurance company
“ Tied ” Agent – Represent Single Insurer
Discourages shift of Insurance companies
Advice Customer harmonizing to Needs
Ability to sell Multiple Products
Supply Market Intelligence
Good working cognition of iRDA ordinances and willingness to adhere to it.