Rules and Regulations for a Insurance Specified Person (ISP)
Do(s) and Don t(s) of ISPs
The Do s and Don ts of becoming AN ISP:
1. An ISP can sell insurance through probable buyers. Probable buyers can be anybody. They can be
your friends,
your family, or relatives. He/she can also approach influential people like politicians, actors,
professors etc. He can
also approach his satisfied customers through whom the good word of mouth can spread.
2. AN ISP is always expected to sell in an ethical manner. What is ethical selling? In Ethical
Selling the customer s
needs and requirements are given the topmost priority. All information regarding the customer should
be
kept confidential. Also, the ISP should follow a consultative way of selling rather than just
selling.
3. AN ISP should provide the customer with After Sales Service. Since Insurance is a completely
service–driven
industry, therefore, providing After Sales Service is not a one–time activity. It is a continuous
process. Thus,
providing an after sales service is very important. It helps to maintain healthy and good
relationship
with the
customer and also, helps to increase business.
4. AN ISP must know which products he/she is allowed to sell.
5. AN ISP must acquire all the documents as per the KYC norms. After acquiring the form from the
customer he must
submit it with the insurance company.
Grievance Redressal Mechanism
It is very important for an ISP to know the steps of grievance redressal. In case if any servicing or
claims related issue
arises then the policyholder can go through these following steps:
- Contact the call centre number of his Insurance Company. The insurance company provides a
unique complaint ID for the same and tries to resolve the issue
- If the policyholder has not yet received the resolution or is not satisfied with the
response then
he/she can login to IGMS
portal (click here).
IGMS is an integrated grievance management system. This system facilitates online
registration of
policyholder’s complaints and the ticket raised, gets registered with IRDAI. Also,
simultaneously it
gets reflected into the insurer’s account. It helps in tracking status of the complaint.
This is then managed
by the grievance redressal cell of the respective insurance company.
- If this also leaves the policy holder dissatisfied, the policy holder may approach the
ombudsman
for redressal, provided the amount does not exceed 30 lakh rupees. Insurance ombudsman is a
non–judicial
authority created by Central Government.
- One can even go to the consumer forum but then he should be aware of the three tier
judicial
system.
The first is the District Forum: Financial Jurisdiction is 20 lakhs
The second is the State Commission: Financial Jurisdiction is above 20 lakhs but not
exceeding 1CR. They
hear appeals against district forum
The third is the National Commission: Financial Jurisdiction for above 1 CR, where appeals
against state
commission is taken care of and appeal s against national commission lies with the
supreme court.
- A policy holder must understand how the grievance redressal process works and as AN ISP
one must educate their
customers on the same.
Anti–Money Laundering: AML and KYC Norms
What is Money Laundering?
Money Laundering is the concealment of the origins of illegally obtained money, typically by means of
transfers
involving foreign banks or legitimate businesses. In simple words, it is the method by which “dirty
money”
received from criminal activities is processed through legitimate businesses and converted into “clean
money”. Once
cleaned, the money cannot be easily traced to the person originating the transaction or to the criminal
origin of
the funds
To prevent money laundering in the insurance sector, IRDAI has setup certain guidelines via insurance
products and
has also asked insurance companies to report suspicious transactions.
Each insurer must establish and implement policies like:
- Monitoring and Reporting Cash Transactions Cash premium of more than Rs
1Lakh should never
be accepted. Premiums beyond Rs 1Lakh should be remitted by cheque or demand draft or credit
card or
any other banking channel. If the total premium crosses the limit of rupees 1Lakhs no
part–payment from
different modes are to be accepted. In case if the total premium exceeds Rs 50 thousand but
does not
exceed Rs. 1 lakh, cash may be collected, subject to collection and verification of PAN card
of proposer
which is mandatory.
- Premium more than 1 Lakh Be it by any mode cash, credit card, debit card,
etc. If the premium is
more than 1 lakh per annum, then proper investigation and frequent review should be
done.
- Recordkeeping Every insurer is required to maintain the information/ records
relating to
verification of clients for a minimum period of 5 years.
- Customer Classification Customers should be classified into high risk and
low risk.
- KYC (Know your Customer) In case of direct sales of life insurance products,
regulatory
guidelines mandate that insurers should conduct KYC before the sale of the policy. Linking
of Aadhaar
number to the insurance policy has also been made mandatory, this is applicable for both
life and general
insurances.
- To summaries, if any such suspicion arises then it should be immediately informed to the
compliance officer.
Policyholder s Protection Regulations
IRDAI has introduced regulations to safeguard the interests of the policyholders. Let us understand some
of these regulations:
- Every ISP needs to fully disclose all details about the product. Good faith needs to be
followed
and there should be transparency
- As far as ISP of broker companies are concerned, comparison should be provided to the
prospect
and the most suitable policy as per the client s need should be recommended.
- Insurers, brokers, and intermediaries should follow the code of conduct.
- Proposal form is compulsory in other than marine cargo.
- The insurers shall ensure that a sale executed over distance marketing modes such as
internet,
SMS, telemarketing, interactive electronic medium etc. shall be undertaken by authorized and
qualified salespersons who are specialized in his behalf by the authorities
- A policy cannot be called in question after three years of it being issued. Insurers will
find it
impossible to repudiate claims after three policy years due to the amendment.
- Information about Riders: Riders are the additional benefits provided with the base
policy. In life
insurance these additional benefits are termed as “Riders” and in general insurance they are
referred to
as “Add–ons”. But in both the cases they mean the same. In case of life insurance, the
additional covers
premium, i.e., the rider’s premium should not exceed 30 percent.
- Once the proposal is accepted and the premium is paid, the client can return or cancel
the policy
within the free–look period, which is applicable to only health and life insurance policies.
A 15 days free–
look is provided in cases of health and life insurance. A free–look of 30days is applicable
to electronic
policies and the ones obtained through distance mode in life insurance.
What is a free–look period? Free–look period is a time period in which the policyholder can
review the terms and
conditions of the policy and disagree to any of those terms or conditions. During a
free-look period the policyholder
has the right to cancel the policy. If the policyholder wishes to cancel the policy then he
gets the premium amount as
refund after deducting few expenses like the stamp duty charges, medical test expenses and
pro rata premium.