Section 11 in The Insurance Regulatory and Development Authority (Sharing of Database for Distribution of Insurance Products) Regulations, 2010
11. Obligations of the Insurer. -
(1)An insurer shall ensure that the referral company with which it has entered into a referral arrangement is compliant with all the provisions of these regulations, the Act, the Insurance Regulatory and Development Act, 1999 (41 of 1999), the rules and regulations framed thereunder and such other directions issued by the Authority from time-to-time;(2)An insurer shall maintain a record of every referral agreement entered into by it, the total business generated by it under the referral agreement and the total amount payable by it including all the payments made to the referral company, along with the calculation basis of such payments;(3)An insurer shall maintain separate records for each batch of referral data obtained from each referral company, the details of the policies sold out of the references thus obtained and the information regarding the payments made by it under the head 'referral', in Form B as specified in Schedule I;(4)An insurer shall submit to the Authority, the records referred to in sub-regulations (2) and (3) of Regulation 11 and the reports of its activities as relevant for the purpose of these regulations, whenever called upon to do so;(5)An insurer shall bring to the notice of the Authority, any change in the information or particulars previously furnished that has a bearing on the approval granted by the Authority or the modification, if any, in the information that has been uploaded in the IRDA Portal at the time of registration not later than fifteen days from the date of occurrence of such change;(6)An insurer shall upload the duly approved modification to the information or particulars previously furnished to the Authority not later than fifteen days from the date of grant of such approval;(7)An insurer shall pay, such fees or remuneration, by whatever name called, to the referral company for such database that is converted into sales, which shall not exceed twenty-five per cent. of the commission payable or actually paid, whichever is lower, on the first year premium of the first policy sold on the basis of the lead obtained from the referral company. The fees or remuneration to be paid shall form part of and be within the overall limits on the commission and expenses as provided for in sections 40B and 40C of the Act and the relevant rules and regulations made thereunder. However no fees or remuneration, by whatever name called, shall be paid by the insurer to a referral company in respect of the policies that are sold without relying upon the data shared by it; Provided that in the case of life insurance policies procured, where the premium is payable in other-than-yearly mode, the referral fee shall be paid only to the extent of the first year premium instalment/s and that have been received by the insurer; Provided further that in case of long-term polices under general insurance, the referral fee shall be paid only to the extent of the premium instalment/s in the first year of the policy and that have been received by the insurer;(8)An insurer shall not pay any fees or remuneration, by whatever name called, for such database converted into sales more than once during the tenure of the referral arrangement.(9)An insurer shall not pay any fees or remuneration, by whatever name called, on any type of renewal premium/policy payable from the second year and the subsequent years or for the sale of a new policy to the existing customer of the insurer;(10)An insurer shall not, in respect of any database or lead, by whatever name called, make any payment in advance to any referral company;(11)An insurer shall not pay the referral company fees or remuneration, by whatever name called, towards the costs incidental to the referral activities including maintenance of the database, infrastructure, training, entertainment, development, communication, advertisements, sales, promotion etc;(12)An insurer shall not pay any remuneration towards acquisition of any database after the termination of the referral agreement;(13)An insurer shall ensure that all the transactions in terms of the referral arrangement are in accordance with the provisions of the Act, the Insurance Regulatory and Development Act, 1999 (41 of 1999), the rules and regulations framed thereunder and such other directions as issued by the Authority from time- to-time;(14)Every insurer shall forthwith terminate all the referral arrangements entered into prior to the coming into effect of these regulations that are not in conformity with the provisions of these regulations. Such arrangements shall however be allowed to continue subject to them being suitably modified or amended in terms of these regulations, within a period of six months from the date of notification of these regulations, and after obtaining the prior approval of the Authority;(15)The insurer shall nominate one of its senior officials who reports to the board of directors of the insurer, as a compliance officer, who shall be responsible for the verification and due diligence pertaining to the proposed and existing referral companies and shall also be authorised to sign the referral agreements. The compliance officer shall also be responsible for reporting all matters pertaining to the referral agreements to the Authority;(16)The insurer shall be responsible for the acts of omission or commission of its employees or the persons whose services have been availed or procured by it towards the referral arrangement.
