Irdai proposes cap on agents' commissions

Limit of 20% of gross written premium for general and health products

- SUBRATA PANDA

ON THE CARDS

• Insurance firms need to have a board-approved policy on commissions and remuneration paid to agents and intermediaries
• For life insurance companies, commissions to be linked with expenses of management
• For policies directly procured by an insurer, no commission must be paid to agents
• Govt will notify the commissions to be paid under govt insurance schemes

The insurance regulator has proposed a cap on commissions paid by the health and general insurance companies at 20 per cent of gross written premium (GWP) -- a plan that could impact health insurers because their commissions are much higher than the prescribed limit. According to industry players, general insurance firms' commissions are around 20 per cent of GWP.

This comes after the and Insurance Regulatory Development Authority of India's (Irdai's) move to cap non-life insurers' expenses of management at 30 per cent of GWP.

According to the draft norms released on Wednesday, insurance companies need to have a board-approved policy on commissions, remuneration, or reward paid to agents and intermediaries, which will be reviewed annually based on the experience.