As per the recent ordinance passed by the IRDAI on licensing of corporate agents which stated that insurance companies cannot get more than 90 per cent of business from one insurer in one category (of life, general or health) in the first year.
The cap would limit the maximum business to 75 per cent in the second year, 60 per cent in the third, and 50 per cent in the fourth year.
Clarity on the provision is being sought by insurance companies, as they would have to rewrite shareholder agreements with exclusivity clauses, if it comes into effect. The companies could also seek to increase the cap of the fourth year to 75-80 per cent.
Exclusive tie-ups of a bank and insurance company as a corporate agent would be a thing of the past. The insurance regulator proposes to allow banks to tie up with a maximum of three insurers each from life, general and health segments.
According to current laws, corporate agents (like banks and non-banking financial companies) are allowed to tie-up with only one life insurer, one non-life insurer and one standalone health insurer.
The regulator has proposed the registration of a corporate agent failing to comply with these norms be suspended or even face cancellation of licence, apart from financial penalties. All existing corporate agents would have to register afresh and apply for a licence to IRDAI if the new norms are finalized.