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IMFs – The Next Wave In Insurance?

The IMF structure will enable individual agents to foray into a diverse set of financial products such as mutual funds, post office products and loan products

The number of life insurance agents in our country is on a decline, and has been for some time now. Between 2014 and 2015, close to 1.2 lakh agents dropped out of the workforce. The first half of 2016 witnessed another 30,000-odd fallouts; the number of active agents stands at about 20.3 lakh as on date.

The exodus is partly fueled by extensive investor education initiatives by mutual fund companies that created awareness amongst the urban population about the need to save in more aggressive and low-cost asset classes for their long-term financial goals. In addition, middle-income Indians are by and large seeking out holistic financial planning-led solutions that differ markedly from the heavily siloed product-led solutions that most life insurance agents have to offer.

Acknowledging the need to stem the rot, the IRDAI recently introduced a new, innovative distribution channel called the “Insurance Marketing Firm” (IMF). According to the IRDAI portal, 34 intermediaries have been issued the IMF licence already. Another 200 companies have received an no-objection certificate to change their names, which is a step forward in the direction of becoming a licenced IMF. It’s a timely move by the IRDAI, given that the insurable population is expected to grow to 75 crore individuals by 2020.

Off late, unlicensed distribution platforms have come under the IRDAI scanner in a big way, forcing many to re-think their channel strategies. 

The IMF structure will enable individual agents to foray into a diverse set of financial products such as mutual funds, post office products and loan products. In addition, the IRDAI has permitted IMF’s to source business in the products of two life, two general and two health insurance companies — a welcome step in the direction of conflict-free advice. 

Good intentions notwithstanding, significant information gaps still exist when it comes to the how’s and why’s of the IMF channel. Many financial intermediaries are still unsure about the empanelment process, regulatory aspects and the real benefits of acquiring a license. The incognisance isn’t restricted to intermediaries alone; a senior Life Insurance executive recently confessed (on conditions of anonymity) that Insurance companies themselves are also unclear about the precise technicalities involved!

Now seems to be as good a time as ever for insurance companies, the IRDAI and the Life Insurance Council to jointly engage in a strategic, large scale push to create more awareness about the IMF channel as it can lead to a better client experience.



This article was published in BW Businessworld issue dated 'Nov. 14, 2016' with cover story titled 'India’s Best B-Schools Survey 2016'



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