Post offices are likely to become agents for insurance companies
Very soon, your neighbour hood postman can be your insurance agent. The Insurance Regulatory Development Authority (IRDA) has granted permission to postal circles to distribute insurance products. IRDA has allowed each circle of the Department of Post (DOP) to act as a corporate agent of insurers. This effectively means that post offices will now serve as an office for insurance agencies.
The DOP has divided the whole country into 22 postal circles for providing postal services. As per IRDA, each Circle of India post should be treated as a separate unit in order to grant independent corporate agent licence with various insurers. The Insurance Regulatory and Development Authority (IRDA) allowed each circle to tie up with two non-life insurance companies, two life insurance companies, one agricultural insurance company and one stand alone health insurance company for this purpose. So each circle can act as an agent of five various insurance companies for various insurance activities.
In case of metropolitan areas, the head of a circle may approach IRDA for prior approval of further division within the circle into separate units because of large population. The smaller units can then obtain licence to act as corporate agents. Corporate agents act as insurance agent for insurers and procure businesses on behalf of the insurance companies through its executives.
Post office and more
An expert committee on 'Harnessing the India Post Network for Financial Inclusion' had earlier recommended that the low cost platform of India Post be used for strategic partners like microfinance institutions (MFIs), mutual funds and insurance companies. It also suggested expanding the role of Post Office Savings Bank as an agent of Ministry of Finance to play a larger and direct role in financial inclusion.
According to IRDA, the Head/Corporate office of India Post will not obtain license to act as a corporate agent of any insurance company or engage in the distribution of insurance products of any insurance company registered with IRDA in any other capacity.
Indian postal service has 155,333 post offices all over India. With the wide penetration if post offices throughout the country, the post offices would be in a great position to increase the coverage area of insurance products. The wide reach of the post offices will help the people in rural areas and villages to have insurance coverage. This would increase the financial inclusion objective of the government.
