These firms are free to sell insurance products on behalf of different insurance companies. However, specific guidelines have to be followed by an insurance marketing firm in dealing with clients. Marketing firms have to show transparency and prudence in their dealings with clients. Insurance marketing firms do not have any contract of exclusivity with one insurer. They can work for multiple insurance companies.

Insurance marketing firms hire Insurance Sales Persons (ISP) who carries out marketing and soliciting activities on behalf of the Insurance Marketing Firm. A financial executive is also appointed by Insurance Marketing Firm known as a Financial Service Executive (FSE). These executives are responsible for soliciting and marketing non-insurance products which are regulated by other authorities.

Services Offered by an Insurance Marketing Firm

• Marking of Insurance products Insurance Marketing Firms are required to market and solicit products related to insurance. The types of products that can be solicited are health insurance, general insurance, and life insurance products. Insurance marketing firms can only market individual line of products in the market. They cannot market commercial products in the market.
• Insurance Servicing Activities As per the regulations of the Insurance Regulatory and Development Authority of India (IRDAI), marketing firms can carry out servicing activities on behalf of insurance firms. Back- end activities such as outsourcing can be carried out by an Insurance Marketing Firm. Insurance Marketing Firms can also be appointed as a repository. Apart from this, marketing firms can carry out surveys and assess the amount of loss during the incident. Marketing firms have the authority to appoint licensed surveyors and loss assessors. Any other activity can be carried out by an Insurance Marketing Firm as per the requirement according to the IRDAI.
• Marketing of Financial Services Insurance marketing firms carry out other services other than insurance activities. The sale of mutual funds is regulated by the Securities Exchange Board of India (SEBI) can also be carried out by an insurance marketing firm. Other financial products, such as dealing in securities, can also be carried out by an insurance marketing firm. Banking and Financial products can also be dealt with by an insurance marketing firm. These products have to be regulated by the Reserve Bank of India and other concerned regulatory authorities.

Scope of Insurance Marketing Firm License

The insurance marketing firm engages an independent ISP for procuring and marketing insurance-based products. Insurance marketing firms hire ISP to solicit and procure two Life, two General, and two Health Insurance companies. However, this will be regulated by the authority.

When it comes to general insurance, insurance marketing firms are only allowed to handle retail lines of insurance-related products. They have to follow certain guidelines related to motor, health, personal accident, householders, shopkeepers, and such other insurance products which are approved by the authority.

Prior approval is required from the authority regarding any form of change in the engagement with the insurance company. Insurance marketing firms are allowed to deal with shares, stocks, mutual and pension funds. The activities carried out by an Insurance Marketing Firm are related not only to insurance but also to other products.

Why Insurance Marketing Firm License is required

• To ensure that there is a significant amount of insurance products that are marketed and solicited on behalf of insurance companies.
• To ensure that there is compliance with relevant laws and regulations related to insurance products.
• To promote marketing strategies for insurance products.
• To act in the best interests of the clients.
• To ensure that a nodal authority regulates the insurance business.
• Insurance marketing firm License would also assure clients the authenticity of the marketing firm.

Eligibility criteria for Insurance Marketing Firm License

The Government of India, along with the Insurance Regulatory and Development Authority, has prescribed specific requirements for an Insurance Marketing Firm License.

Corporate Structure

An applicant has to be registered as one of the following for an Insurance Marketing Firm License.

• Company that is established under the Companies Act 2013 or the previous Company Law 1956;
• A partnership that is registered under the Limited Liability Partnership Act, 2008;
• A co-operative society which is registered under the Co-operative society act 1912; and
• Any other individual or company that is allowed to conduct the business related to an Insurance Marketing Firm.

Capital Requirements

The applicant must satisfy the capital requirements for applying for an Insurance Marketing Firm License:

What is the paid-up capital requirement?

• Net Worth – Net Worth of the applicant must not be less than Rs 10 lakhs.
• If the applicant is applying to act as an Insurance Marketing Firm in a particular district, then the applicant's net worth must be at least Rs 5 lakhs.
• The applicant has to ensure that the net worth of the company is maintained at all times. For this purpose, a certificate must be submitted, which is certified by a chartered accountant within three months of the closing of the financial year.

Foreign Holding

Foreign Holding by a foreign investor must not exceed more than 49% of the paid-up equity share capital or the insurance marketing firm's contribution. The authority would calculate the calculation of foreign equity holding.

Principal Officer

The insurance marketing firm must have a principal officer with specific qualifications. A principal officer must be responsible for all the activities of the insurance marketing firm. The principal officer must have the following criteria:

• Associate/Fellow of the Insurance Institute of India, Mumbai; or
• Associate/Fellow of the Institute of Actuaries of India; or
• Associate/Fellow of Chartered Insurance Institute, London; or
• Postgraduate qualification of the Institute of Insurance and Risk Management, Hyderabad; or
• Graduate with Insurance experience of five years preceding the year in which the application is made; or
• Graduate with ten years of experience in the financial services sector proceeding the year in which the application is made.

Apart from this, the principal officer must satisfy training requirements as per the rules and regulations of the authority.

The directors, principal officers, and shareholders of the insurance marketing firm must not be disqualified under any law in force. They must also satisfy the criteria of the FIT and PROPER test.

Name of the Business

The Insurance marketing firm must have in its name the following words ' Insurance Marketing Firm.'

Office Space/ Facilities

The applicant applying for an Insurance Marketing Firm License must also satisfy necessary infrastructure such as adequate office space, equipment, trained manpower, and IT infrastructure to effectively discharge its activities.

Purpose of the Business

The applicant should ensure that the main object of the business is insurance marketing. These must be mentioned in the objects clause of the Articles of Association (AOA) and the Memorandum of Association (MOA). To secure the insurance marketing firm's License, activities must be according to the set of activities approved by the authority.

No refusal of application

The applicant must not be refused an application in the past for an Insurance Marketing Firm License.

Certification Requirements of ISP and FSE

• The ISP and the FSE has to satisfy the certification and training requirements as required by the authority.
  ISP that are engaged by the insurance firm has to market insurance products related to life insurance, general insurance, and health insurance should have a valid certificate according to the requirements of the authority.
  FSE must have an independent financial License from financial authorities.
  ISP must have undergone insurance marketing firm training, which is prescribed by the authority and passed the examination conducted by the authority.
  ISP for an insurance marketing firm has the same training requirements as the Principal Officer.
  FSE has to have the necessary training requirements when appointed by the Insurance Marketing Firm.

Process / Procedure for Applying for an Insurance Marketing Firm License
Application for Certificate of Registration for Insurance Marketing Firm License

• The applicant should make an application in Form-A regarding the Insurance Marketing Firm License.
• A non-refundable fee of Rs. 5000/- plus service tax (GST) has to be paid to the authority.
• The application must be submitted with documents mentioned in FORM-C Schedule I of the regulations.
• All the necessary documents have to be submitted along with Form-A.
• A declaration has to be provided by all the principal officers and directors regarding the FIT and PROPER criterion that is sufficed by the directors/ principal officers of the Insurance Marketing Firm.
• Along with the Application, the exam pass certificate of the Insurance Marketing Firm must be submitted. The exam pass certificate will relate to the principal officers and the directors of the insurance marketing firm.
• Apart from this, a copy of the surveyor, loss assessor license of the individual who is employed by the Insurance marketing firm should be submitted to the authority.
• Approved Person Certificate Copy also has to be submitted to the authority.
• Licenses of all the registered individuals must be submitted to the authority by the insurance marketing firm. This would also include the Licenses under IRDAI, SEBI, RBI, PFRDA, and Post Office.
• The application must confirm according to the requirements of the authority.

Validity for Certificate of Registration for IMF

The license for an insurance marketing firm is valid for three (03) years. An insurance marketing firm cannot conduct activities with an expired certificate.