Regulations on commissions drafted

In consultation with the Insurance Advisory Committee the Insurance Regulatory and Development Authority has drafted regulations on the payment of commission or remuneration or reward to insurance agents and insurance intermediaries.

The regulation aims to enhance responsiveness of the regulation to market innovation, 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 objective. The new regulations are also believed 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.

According to the new draft, the commission or remuneration or reward to be paid to an insurance agent or an insurance intermediary shall be decided by the insurer based on its Board approved policy. The maximum commission or remuneration or reward or otherwise payable under life insurance products including health insurance products offered by life insurers will be calculated according to certain variables.

The maximum commission or remuneration or reward or otherwise payable under general insurance products including health insurance products offered by general insurers shall not exceed 20 percent of the gross premium written in India in that financial year.

In addition, the new draft states that the maximum commission or remuneration or reward or otherwise payable under health insurance products offered by standalone health insurers shall not exceed 20 percent of the gross premium written in India in that financial year.