Kathmandu: The new directives of institutional insurance agency made public by Beema Samiti may prove a milestone to the agency business. As per the authority of the Samiti, the directives will not only issue license to the institution, indeed it will encourage the existing agency(those who are working unorganized) can also establish institution and work as institutional agency.
Beema Samiti has issued Directive 2078 on Institutional Insurance Agents on Wednesday. This directive is likely to benefit individual agents, insurance companies and the government. Experts say that their current business will also be long-term as they will be able to work as an agent with an institutional agent’s license as per the directive. The new directive has paved the way for the digital payment service providers(PSP) too to work as an institutional agents. But they have to get permission for their immediate regulator, Nepal Rastra Bank(NRB).
Life and non-life insurance businesses require a separate agent’s license. But agents working under the umbrella of an organization can work for both life and non life insurers.
Now, there is an opportunity for the agents scattered all over the country to work in an organized manner. They can establishing their own company to deliver the agency service to a life or non life insurance company. Institutional agents can quickly adopt new technology since they are supposed to be backed by huge capital fund. Moreover, bank financing will also be easily available to them based on their business.
Benefits to individual agents
Though some senior agencies have set up a work station at their individual effort to mobilize insurance agents, most of the agents are working as an individually. They are not organized. But this guideline has paved the way for an individual to institutional agency. The institutional agents may have more credibility and reliability for the public in comparison to the individual agency. Just as lawyers are doing business by opening law firms, chartered accountants by opening audit firms, agents can also act as agents by establishing an office with the license of their institutional agent.
Benefit to the insurers
Beema Samiti has not allowed to offer additional benefits and perks to the institutional agents as it is provided to the individual agents. Beema Samiti has made the provision of providing no additional benefits except the commission on insurance premium earning to the institutional agency. It will help minimize the operating costs of the insurers. If the policy is sold at low cost, the profit of the insured will also increase and ultimately increase the bonus rate. Better stability can be expected from the institutional agents in comparison to the individual one.