KATHMANDU: The Insurance Development and Regulatory Authority of India (IRDAI), the regulator of the Indian insurance market, has proposed a cap of 20 per cent commission for agents and 15 per cent for intermediaries in health insurance. As a result, the share prices of Policy Bazaar, ADFC Life Insurance and Turtlemint fell abruptly on the Indian stock market on Thursday.
It has been proposed to limit the commission rate to 15 percent for distributors and 15 percent for agents. Similarly, the regulator has decided to limit the distributor’s commission to 5 percent and agent’s commission to 10 percent for insurance policy.
Now, it is preparing to reintroduce the maximum limit of distributor or agent commission based on the nature of the policy. In 2023, the regulator had left the board of directors of the insurer free to decide on the basis of market competition for the maximum limit of commission. This had taken the rate of commission to 40 to 45 percent. Now, if the new provision is implemented, there will be significant control.
Now, for the protection of loans given by banks and financial institutions, a single insurance premium of 2 percent has been proposed to be made mandatory with the borrower. After the banks and financial institutions set targets for the employees to sell insurance policies and also provided high incentives, the tendency to forcibly give high-value life insurance to the general public increased. After the anomaly, the insurance regulator intervened and capped the maximum limit at 2 percent.
It has been proposed to reduce the distributor’s commission on third-party compulsory motor insurance to zero. The regulator is going to reduce the commission of the distributor to zero, saying that it needs a huge commission on the sale of insurance policies which is mandated by law.
Similarly, if a foreign trip, luxury gift or any other award is given to the agent by showing less direct commission, all those expenses will also be counted as commission to be provided to the concerned agent.
The insured will be relieved of the compulsion to enter his full name and mobile number to get information about the insurance premium on the website of an insurance company. Even if you do not get information about the insurance premium, the sales representative has a tendency to contact and harass you.
If the insurance agent sells the policy as a term deposit and does not inform about the loss that may occur at the time of closing the policy, or sells the insurance policy at an expensive premium ignoring the insured’s source of income, then his identity will be linked to the insurance policy and the information of the bad sale may be made public and the commission may be withdrawn.
