Insurers to comply with referral regulations by Aug 12

A referral arrangement is one by which an insurer gets data base of a prospective clients for a fee from another company.The IRDA had recently ordered scrapping of all such referral agreements entered into by insurers that do not comply with its new regulation called IRDA (Sharing of Database for Distribution of Insurance Products) Regulations, 2010.

The regulations stipulate minimum networth for referral companies and other conditions so that it can sell its data to insurers.

In a clarification issued Monday, IRDA said: "The existing referral entities that do not qualify for sharing data under the new regulations would have to be terminated right away, with effect from the date of notification of the regulations. No extension is allowable in case of agreements with such entities."

For referral companies that comply with the new regulations and having a running arrangement, the insurers have to seek prior approval from IRDA for modifying such agreements within six months.

"It is emphasised that the six-month time is allowed only in cases where the entities are eligible to share data under the new regulations. Insurers are hereby advised to confirm compliance with the above regulations to the undersigned not later than 12th August 2010," said IRDA.