The Insurance Regulatory and Development Authority of India (Irdai) has proposed a 20 per cent cap on the agents’ commission for insurance companies. It has also released a draft consultation paper on the commission limit. Insurers will also have a board-approved policy on commissions of the agents.
In an ‘Exposure Draft’, the insurance sector regulator has proposed to have a commission limit of 20 per cent of the gross premium for general and standalone health insurers. The limit on agents’ commission, remuneration and reward has been proposed for general insurers and standalone health insurers.
The Irdai has also proposed to have a limit on the expense of management (EoM) at 30 per cent of the gross premium for general and standalone health insurers. The expenses of management for insurers include commissions and fixed expenses.
“All the stakeholders are requested to submit their comments/ suggestions, if any, on the proposed draft regulations in the given format on or before 5.00 pm September 14, 2022, to [email protected] with a copy to [email protected],” the Irdai said in a notification.
It added, “In order to enhance responsiveness of the regulation to market innovation and to facilitate the insurers in development of new business models, products, strategies and internal processes and enable in easy compliance with the regulations while fulfilling the regulatory objectives. And also to provide the insurers the flexibility to manage their expenses based on their growth aspirations and the ever-changing insurance needs with an objective to improve insurance penetration, the Irdai (Payment of commission or remuneration or reward to insurance agents and insurance intermediaries) Regulations, 2016 has been reviewed.”
Last month, the Irdai had released a consultation paper on the expenses of management limit. Apart from curbing spendings, the draft also proposed to limit variable pay of the CEO/MD, whole-time directors and key management persons, if there is a deviation of over 10 per cent of actual expenses over the projected one and if additional solvency is not maintained as stipulated.
According to the draft, in the case of a new company, the 30 per cent cap on management expense will not kick in for the first 10 years or till such time as it attains a market share of at least 1.5 per cent in a financial year, whichever is earlier.
The Insurance Regulatory and Development Authority of India is in receipt of requests to review the Regulations from the stakeholders. Therefore, the current regulations have accordingly been reviewed. Some of the key changes are being proposed in the following areas — Single limit of Expenses of Management; additional allowances for incremental Rural sector and the specified schemes; additional allowances towards expenses towards Insurtech, implementation of IndAS and Insurance Awareness; discontinuation of the Segmental compliance and its reporting; and rationalisation of the other compliance requirements.
Read the Latest News and Breaking News here
Comments
0 comment