The insurance regulator is out to leash agents who shift loyalties to rival companies, putting policyholders to inconvenience.
The Insurance Regulatory & Development Authority (IRDA) has introduced new norms that ensure life insurance agents do not shift loyalties for a minimum three years. Agents will also not get renewal commissions if they do not serve a firm for at least five years.
Both individual agents and corporate agents like banks often switch companies to get better commission, leaving policyholders in the lurch on services like reminders for premium payments and collection of cheques. In many cases, this has led to policies lapsing.
Sandeep Nair, who had bought a policy last year from an agent, found his agent selling a rival’s policies.
“The new norms will ensure that good service levels are provided to me even if my agent leaves,” Nair told Hindustan Times.
There are more than 20 million life insurance agents.
The IRDA has also asked for back-up measures and helplines to aid policyholders when agents switch organisations.
Agents will have to inform in writing to all policyholders about the arrangements made to service their policies.
If this is not done, the insurer should not issue a no-objection certificate to the agent for leaving the organisation.
Insurance firms have also been asked to maintain helplines to provide services to policyholders for six months from the date of issue of the no-objection certificate.