What is the Difference between Insurance Marketing Firm and Insurance Broker?

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What is the Difference between Insurance Marketing Firm and Insurance Broker?

Both Insurance Marketing Firm and Insurance Broker are licensed by IRDAI to provide insurance services. However, both of them have different roles to play in the insurance industry.

Want to find out what is the difference between an insurance marketing firm and an insurance broker? Keep reading this article.

What is Insurance Marketing Firm?

Insurance Marketing Firm, or IMF, is an entity registered under the Insurance Regulatory and Development Authority of India or IRDA. The term "Insurance Marketing Firm" was first used in India by the IRDA in the IRDA Registration of Insurance Marketing Firm Act of 2015. 

Insurance marketing firms are entities that are legally recognized in India and are authorized to solicit or procure insurance products, distribute other financial goods and provide insurance services. There is no fixed limit to the number of insurers that an insurance marketing firm can engage with. In its capacity as a marketing company, the IMF can serve as a middleman between the insured and the insurer by acting as a marketer of insurance products.

Because of their special ability, insurance marketing companies can form strategic partnerships with a variety of other insurance intermediaries, including TPAs, surveyors, loss assessors, and insurance repositories. By doing this, IMF is able to offer a wide range of other services that some may argue are outside the scope of its mission. 

As IMF is a marketing firm, it has the power to market the following products as permitted by the IRDA Insurance Marketing Firm license.

• SEBI-regulated companies’ Mutual Funds
• Pension products under the regulations of PFRDA
• Other financial products distributed by SEBI-licensed investment advisors in India
• Banking or Financial products sold by NBFCs under the the Central Bank’s regulations
• Non-Insurance products provided by GOI’s Department of Posts
• Any other financial products under the regulations of the IRDA

Apart from the above-mentioned services, IMF helps with assisting in back office tasks in accordance with IRDA IMF requirements. It also serves as a designated representative for insurance repositories. It introduces surveyors and loss assessors to their organization in order to provide surveying and loss assessment services. It follows the IRDA's instructions when offering other insurance-related services. 

If an insurance marketing firm promotes false information regarding insurance products or violates IRDA’s rules and regulations, their Insurance Marketing License can be canceled by IRDA.

What is Insurance Broker?

An Insurance Broker is an individual or entity which provides tailored or personalized solutions for their customer’s insurance needs. Insurance Brokers are licensed by IRDAI to offer you policies from various insurance companies. Therefore, they represent the customers and not companies like insurance marketing firms or insurance agents do.

Insurance brokers also offer professional advice to customers regarding suitable insurance policies. When a client purchases or renews a policy of an insurance company through insurance brokers, the insurance brokers get commission or brokerage. When it comes to handling claims, insurance brokers assist their customers. 

Insurance broking companies can provide their corporate clients with specialized and tailored services in addition to the best and lowest pricing. The chief executives of insurance broking firms are knowledgeable, skilled individuals who must pass specific tests. Insurance brokers provide their clients with financial advice.

To help their potential customers make an informed choice, they counsel them and present all relevant information about the insurance product, transparently and with full disclosures. The insurance broker works with the insurance provider and the client to handle policy and claim servicing once the customer buys the insurance product. The insurance brokers are answerable to their customers. If a customer faces any discrepancies in services offered by insurance brokers, their Insurance Broker License can be canceled by IRDAI.

As the insurance brokers are advisors for their client’s insurance needs, they must gather data and understand the profile of the client. The insurance brokers, on their clients’ behalf, bargain with insurance providers to develop personalized solutions with the best possible terms and conditions and premium options. These brokers recommend risk management techniques depending on the client’s profile in order to assist in mitigation of risks. These risks could be related to legal obligations, credit, mishaps, natural disasters and so on.

Insurance Marketing Firms Vs Insurance Brokers: Key Differences 

Both Insurance Marketing Firms and Insurance Brokers are extremely important to the insurance industry in India as they connect individuals with suitable insurance products. Even though both of them encourage insurance transactions, they operate under different regulatory frameworks and operational approaches.

The insurance marketing firms are regulated under Insurance Regulatory and Development Authority of India (Registration of Insurance Marketing Firm) Regulations, 2015. But when it comes to Insurance brokers, the IRDA (Insurance Brokers) Regulations, 2018 regulates them.

IMFs focus on marketing and selling insurance products while insurance brokers provide a wide range of services like risk assessment, advisory services, assistance at the time of claim and placement of insurance with multiple companies.

IMFs are responsible for representing insurers and promoting their products. However, the insurance brokers act on the clients’ behalf, offer impartial advice to clients and make them aware about a wide range of insurance products offered by various insurers in the market.

IMFs generally market products of insurers they’ve collaborated with and so they have a limited portfolio of insurance products. But when it comes to insurance brokers, they have a wide range of insurance products from various insurers which enables their clients to have more options.

Relationships of clients with IMFs are often transactional as IMFs are focused on sales and immediate customer service. But in the case of insurance brokers, the relationships maintained by them with clients are for the long term and they offer continuous support and advice to clients. As brokers work for the clients, if the clients are not satisfied with an insurance product, they can ask the broker for help or to choose another insurance product.

Conclusion

Insurance marketing firms are really important for insurance brokers. These firms market insurance products. On the other hand, insurance brokers are really important for the clients since they represent them and not the insurance companies. Both insurance marketing firms and insurance brokers are licensed by IRDAI under different regulatory frameworks which must be adhered to at all times. By playing their roles with honesty, insurance marketing firms and insurance brokers make a major contribution to the insurance industry’s growth.

If you want to obtain Insurance Marketing Firm License or Insurance Broker License from IRDAI, you can connect with Registrationwala for assistance!

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