Hi Friends!
Some of my readers had hard time to understand some terminology of the blog. One of them suggested that I make a glossary of the industry specific terms for greater clarity.
So here its is!! This page lists down the concepts that I use in my articles. This will help me write the articles in a flow and still help the readers with the detailed discussions of the terms.
Please let me know if I mistakenly skip something to discuss here. Please feel free to write to me in case of any doubts or inaccuracies.
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1. Corporate Agent -
It is an agent of an insurance company and is incorporated in form of a company under Companies Act, 1956 or a partnership firm under Partnership Act, 1932. Compared to an individual agent, this agency has some risks for the insurers and the prospective customers. In individual agency the customer directly faces the agent and the agent explains and sells the policy to the customers. But in corporate agency, the agent is a corporate form with no physical existence. This problem is resolved by employing the mechanism of SPs and CIE.
It is an agent of an insurance company and is incorporated in form of a company under Companies Act, 1956 or a partnership firm under Partnership Act, 1932. Compared to an individual agent, this agency has some risks for the insurers and the prospective customers. In individual agency the customer directly faces the agent and the agent explains and sells the policy to the customers. But in corporate agency, the agent is a corporate form with no physical existence. This problem is resolved by employing the mechanism of SPs and CIE.
Specified Persons (SP) is a person who is a full time employee of the corporate agent. He is qualified and trained as an individual agent. He is eligible to sell the insurance.
Chief Insurance Executive (CIE) is a full time employee of the corporate agent supervising the work of the one or more SPs and taking care of all the administrative matters of the corporate agent. The CIE has to be even more qualified (AIII or FIII etc.) and has to undergo training in supervising insurance business. The CIE is a key management personnel of the corporate agent.
There is a host of regulations and guidelines on the topic and it is primary responsibility of the insurer to ensure compliance with the regulatory requisites. The insurer has to appoint a senior management personnel as a Designated Peron (DP) who shall be responsible to ensure total due diligence in appointment of corporate agent and its functioning. After the due certifications from the DP, the application is finally approved by IRDA.
Thus the regulatory structure is nicely weaved around promoting the policyholders' interests.
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2. File & Use -
Every life insurance product that floats in the market has to be approved by IRDA. This approval is sought from IRDA in a pre-determined format called "File & Use Application". This application contains all details of relating to the type of product, benefits offered, charges, commission structure, actuarial assumptions, investment pattern of the funds collected etc. As the name goes, the application is first 'filed' and then if approved the insurers may 'use' i.e. launch the plan for sale. The F&U is, in figurative terms, 'Bible for the product'. The insurance product thst is launched HAS to be used in the exact form as approved. If any deviation is made it has to be reported to the Board of Directors of the insurer and then to IRDA. IRDA may or may not grant exceptions looking at policyholders' interests involved and facts under which the deviation was done.
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2. File & Use -
Every life insurance product that floats in the market has to be approved by IRDA. This approval is sought from IRDA in a pre-determined format called "File & Use Application". This application contains all details of relating to the type of product, benefits offered, charges, commission structure, actuarial assumptions, investment pattern of the funds collected etc. As the name goes, the application is first 'filed' and then if approved the insurers may 'use' i.e. launch the plan for sale. The F&U is, in figurative terms, 'Bible for the product'. The insurance product thst is launched HAS to be used in the exact form as approved. If any deviation is made it has to be reported to the Board of Directors of the insurer and then to IRDA. IRDA may or may not grant exceptions looking at policyholders' interests involved and facts under which the deviation was done.
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