Role and Duties of an Insurance Agent

Role and functions of an agent 

Becoming an agent

There are a number of steps that you as an individual need to take and a number of criteria that you will need to fulfil if you wish to become a life insurance agent. The Insurance Act requires that an insurance agent must have a licence, and the IRDA deals with all issues of licences and other matters relating to agents. There are regulations which must be complied with at all stages in the process. Full details of these regulations and requirements will be covered later in the study text. In this introductory chapter we shall just outline the process of becoming an agent and explain what an agent does.

Role of an agent

As stated in section F2, agents are hired by insurance companies and they act as the main link between the insurance company and the insured. Their role is to recommend to clients the right products that address the clients’ needs. At the same time they must act in the interests of the insurance company by using their unique position of knowing their clients well enough to protect the insurance company from any undue adverse product selection.

This makes the role of the agent in the entire insurance business very crucial.

Agents facilitate the smooth sale of insurance products by assisting their clients with completing the paperwork involved, and after the policy is sold the agent should ensure it is serviced properly until maturity or in the event of a claim. At the time of a claim, the agent should also assist the client to complete the required formalities to ensure quick settlement.

In India, life insurance agents deal with a range of insurances which are generally considered under the following headings:

• basic life insurance products, such as term insurance and whole life plans;
• savings products; and
• other financial products, such as health insurances and accidental death plans.

All these products will be looked at in later chapters.

Once licensed and appointed, the agent is an independent professional. At the heart of this is the need for agents to put the interests of their clients above all else.

Code of Conduct for agents

In supporting agents to carry out their role in a professional manner, every licensed agent must adhere to the Code of Conduct specified by the IRDA in the Insurance Regulatory and Development Authority (Licensing of Insurance Agents) Regulations 2000 as per Regulation 8. In the Code of Conduct the IRDA gives details as to what an agent shall and shall not do. For instance, the agent should disclose all information relating to the insurance company that they represent and the products they are recommending. They should act in the best interests of the client while at the same time making sure that there is no adverse selection against the insurance company (we will discuss adverse selection further in chapter 4).

In addition, the insurance agent needs to take steps to keep the business they have secured for their company. To do this they need to make every attempt – both orally and in writing – to ensure that the policyholder pays the premium within the required time.

We will return to the Code of Conduct for agents later.


Anand Khemka
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