The firm, which is into ‘network selling’, has tied up with Max New York Life Insurance Co Ltd and Royal Sundaram Alliance Insurance to market insurance products via a subsidiary, through its more than four lakh distributors

AmSure Insurance Agency Ltd—a joint venture between Hollard Insurance and Amway India Enterprises—is leveraging the latter’s large distribution network across India to market insurance products. AmSure, a corporate agent of Max New York Life Insurance, started network marketing of insurance products a few years back. AmSure sells six products including life insurance, health insurance, and unit-linked insurance plans (ULIPs).  

When Moneylife contacted an Amway distributor, he said that Max New York Life conducts training sessions for all distributors on a periodic basis. The company also has dedicated insurance planners certified by the Insurance Regulatory and Development Authority (IRDA). Insurance companies’ teaming up with corporate agents is not something new. Many private insurance companies have granted corporate agency licenses to numerous firms with some of the agents openly encouraging bizarre pyramid schemes.

A person who wishes to join Amway need not necessarily buy an Amway product or an insurance policy. To become an independent Amway distributor, one has to become a member by coughing up Rs995 as registration fee. The distributor can avail of 20% discount on all Amway products. The distributor has to shell out Rs495 annually to renew his membership.

The amount of premium paid by a policy holder is the business volume (BV). If a distributor attains Rs16,500 worth of BV, he gets 6% commission on this amount. Every Amway product also has denominated points. For a total BV of Rs16,500, a distributor gets 300 denominated points, which works out to the monetary equivalent of Rs55 (Rs16,500/300).

The commission on the BV can range from 6%-21%, on a graded basis. The commission is directly credited to the distributors’ bank account through the electronic clearing system. The distributors can carry on their marketing across all cities where Amway offices are situated. Unlike other pyramid schemes where the commission depends on new registrations, Amway’s commission structure is based on business volumes of its products. For instance, existing Amway distributors can buy Amway products and attain the requisite business volume to earn commission. According to Amway distributors, the commission structure is also applicable for insurance products.

“Referral fee is allowed in income-tax parlance. Many big insurance agents don’t pay any tax. One cannot prove that the person has only referred and not taken part in selling insurance,” said a certified financial planner. An email query sent to Max New York Life remained unanswered.

Amway India started its operations in 1998 and has over 450 fast-moving consumer goods (FMCG) products in nutrition, wellness, beauty, home, and commercial products on offer. These products are exorbitantly priced and sold through fat commissions and pyramid schemes. The company is a member of the Indian Direct Selling Association (IDSA). The company claims that it has 4.50 lakh independent Amway business owners. Amway officials could not be contacted for immediate comments.