Source: The Economic Times

The bad publicity notwithstanding, the friendly neighbourhood agent remains the go-to man for many policyholders when it comes to insurance-related matters. Perhaps recognising their key position in the insurance space, the Insurance Regulatory and Development Authority (IRDA) has released guidelines on servicing of 'orphan' policies. These rules assume significance in light of dwindling number of agent across life insurance companies. Life insurance policies get 'orphaned' when the distributor discontinues his agency or his services are terminated by the insurer. In such cases, the responsibility of servicing these policies is transferred to an active agent, who stands to earn commission on the renewal premiums. Typically, agents' services are required for paying renewal premiums, using switch funds option, availing of top-ups, making partial withdrawals, surrendering the policy and of course, assisting nominees make a claim.

Henceforth, however, only lapsed policies - where the policyholder has not paid premiums for six months after the due date - can be allotted to another agent. Also, single premium and limited premium policies (where the premium-paying term has come to an end) cannot be assigned to other agents. So, what does the new directive mean for policyholders? Firstly, it could benefit proactive policyholders diligent with their premium payments. Since only lapsed policies can be re-assigned, the active ones will have to be serviced by the company directly. On the flipside, if you are used to your agent's assistance, you might have to make a mental re-adjustment. You need to remember that the distributor is merely an intermediary and hence, his absence does not alter your relationship with the life insurer. You can always utilise other channels provided by the company to facilitate policy servicing.