The Insurance Regulatory and Development Authority (Irda) has expressed its concern over the referral programme prevalent among insurers. According to a senior Irda official, some private insurance company agents and multi-level marketing (MLM) companies are misusing the scheme.
Though the concept was authorised by Irda, it believes agents riding on the new concept are not following the procedures properly.
The referral programme was a new concept started by private insurers some two years ago to facilitate sale of insurance policies by the existing agents, who in turn, reach out to prospective clients through an informal understanding with local networks. The informal sub-agent, in turn, gets a portion of the commission from the authorised agent.
Irda has come across cases where sub-agents have reportedly missold the policies since they are not properly trained. Irda is worried about such misselling of policies, said the official.
Some MLM companies have great products and potential but a part times sales force can mess things up, especially with these types of products. Good article.