The Insurance Regulatory and Development Authority (Irda) has ordered insurance companies to refrain from issuing no-objection certificates (NOCs) to their agents, who are leaving the organisation to join another insurance company, unless all the policyholders serviced by the agent have been informed in writing about the change.

This move is aimed at tackling the menace of insurance agents hopping from one company to another for better incentives and commission, leaving policyholders in the lurch.

Irda has instructed insurers to protect the interest of policyholders before issuing NOCs to the agents and has asked them to make arrangements for servicing of policies earlier under the agent leaving the insurance company.

With this new direction from the insurance regulator, it will become tough for insurance agents to job hop and will also stop customers from moving to another insurer along with the agent.

Financial Chronicle had first reported on April 7 that Irda was working on stricter norms to put an end to poaching of agents. The insurance industry has been seeking regulatory intervention to ensure that agent poaching does not adversely impact the company or the policyholder.

“There have been instances of agents moving to different companies. In such cases, agents face difficulties. Most policyholders are left to fend for themselves or forced to switch to another insurer, thereby losing benefits of existing policy," said J Hari Narayan, chairman of Irda, in a circular issued.

The insurance companies have been directed not to release renewal commission to agents who leave a company before completing five years of service. The regulator has asked insurers to enter into an agreement with agents/corporate ag-ents for at least three years. However, the insurer is free to terminate the services of an agent on grounds of non-performance or fraud committed by him.

The insurance company will have to maintain a distinct cell/helpline to provide service to the policyholders of the agents leaving the insurers for a period of six months from the date of granting NOC.