Inspection of Insurance Marketing Firm

Inspection of Insurance Marketing Firm

After the successful registration of a business entity as an Insurance Marketing Firm (IMF), the firm commences on its business activities to solicit, procure, sell and distribute insurance related services and products to the customers, as it is licensed to do so.

 The need of an IMF to operate in the insurance market is to have maximum penetration in the customer domain, so that more and more insurance services are subscribed by the customers. 

This will essentially boom the businesses of insurance companies in the country, generating revenue for the insurance firms and safeguarding the people from all kinds of risks in their lives.

These Insurance Marketing Firms are registered under and regulated by the laws defined in the Insurance Regulatory and Development Authority of India, Registration of Insurance Marketing Firm Regulations, Act of2015.

These regulations need to be mandatorily followed by an IMF as complied by the authority, even after the firm is registered by the authority. Read More Useful Content: NBFC Registration

Annual Compliances needs to be submitted and regulations set forth by the authority needs to be religiously followed in order to function smoothly in the insurance markets of India. And to check whether the IMF is performing within the realms of its stated laws, the Insurance Authority causes out Inspection of these IMFs.

These inspections can be carried out periodically on in case of a filed compliant by a policyholder or a violation of set laws, the Authority shall initiate the inspection of the concerned insurance marketing firm on its own call.

 

Reasons for Conducting Inspection

 The Authority may suomotu or upon receipt of information or complaint, can appoint one or more of its officers as the inspecting authority to undertake inspection of the books of accounts, records and documents relating to the Insurance Marketing Firm for any of the following reasons:

To ensure the insurance authority that the insurance marketing firm maintains the books of account, records and documents in the manner strictly specified by the Authority;To check how the Insurance Marketing Firm handles the complaints received from the clients, the policyholders or any such person, on matter bearing the activities of an IMF;To ascertain whether the provisions of the Insurance Acts, as amended from time to time, and their regulations are being complied with by the insurance marketing firm;To inspect into the working procedures and of Insurance Marketing Firm, in the interest of the policyholders.

 

Notice before inspection

Before ordering an inspection, the Authority shall give not less than ten days notice to the Insurance Marketing Firm. If the Authority is satisfied that in the interest of the policyholders no such notice of inspection should be given, it may by an order in writing to direct that the inspection of the affairs of the Insurance Marketing Firm will be taken up without such notice. Read More useful Content: Nidhi Company Registration 

Obligations of Insurance Marketing Firm on Inspection

 

It shall be the duty of every Insurance Marketing Firm in respect of whom an inspection has been ordered and any other associate person who is in possession of the relevant information pertaining to conduct affairs of such Insurance Marketing Firm, including representatives of Insurance Marketing Firm, if any, to produce to the inspecting authority such books of accounts and other documents in his/her custody or control and furnish him/her with such statements and information as the inspecting authority may require for the purposes of inspection.It shall be the duty of every Insurance Marketing Firm and any other associate person who is in possession of relevant information pertaining to conduct affairs of the Insurance Marketing Firm to give to the inspecting authority all such assistance and shall extend all such co-operation as may be required in connection with the inspection and shall furnish such information as sought by the inspecting authority in connection with the inspection.The inspecting authority shall, for the purposes of inspection, have the power to examine an oath and record the statement of the Principal Officer, any employees, directors, partners or person responsible for or connected with the activities of Insurance Marketing Firm or any other associate person having relevant information pertaining to such Insurance Marketing Firm.The inspecting authority shall, for the purposes of inspection, have power to obtain authenticated copies of documents, books of accounts etc in respect of the activities of Insurance Marketing Firm, from any person having control or custody of such documents.

 

Submission of Inspection Report to the Authority

The inspecting authority shall, as soon as possible, but in any case not later than 30 days from the completion of the inspection, submit an inspection report to the Authority provided that if directed to do so by the Authority, the inspecting authority may submit an interim report.

Action on the Inspection Report

The Authority may after consideration of the inspection report and after giving reasonable opportunity of hearing to the Insurance Marketing Firm, issue such directions as it deems fit in the interest of policyholders like–

Requiring the Insurance Marketing Firm to refund any money collected as fees, charges or commissions or otherwise to the concerned clients along with the requisite interest.Prohibiting the Insurance Marketing Firm from operating in the insurance market for a specified period.Any other action as the Authority may deem fit.

 

Appointing the Auditor for inspecting the Insurance Marketing Firm

The Authority will appoint a qualified auditor to audit the books of account or the affairs of an Insurance Marketing Firm provided that the auditor so appointed shall have the same powers as that of the inspecting authority.

The expenses of such audit shall be borne by the Insurance Marketing Firm. The Auditor shall, as soon as possible, but in any case not later than 30 days from the date of completion of the audit, submit the report to the Authority provided that if directed to do so by the Authority, the auditor may submit an interim report.

Thus the report submitted by the Auditor shall be dealt with in the same manner as defined as mentioned above in action on the submitted report..

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