Insurance Regulatory and Development Authority of India (IRDAI) in an exposure draft on remuneration for insurance agents and intermediaries has proposed higher commission for agents in the first year as also subsequent years to incentivise these distributors. Further, it has also said that insurance companies can give rewards over and above commissions.
Here, it said that rewards should not be more than 20 per cent of first year commission or remuneration in case of individual insurance agents and 40 per cent of first year commission or remuneration in case of insurance intermediaries
R M Vishakha, MD & CEO, IndiaFirst Life Insurance said that the proposals would help incentivise agents and especially would be beneficial in the group term space to bring it on par with non-life sector.
The proposal says that in regular premium policies (par and non-par), for policies with premium paying term of 12 years and move will have 50 per cent first year commissions for agents and 10 per cent for the subsequent years. For those with term of 5-11 years, the commission will be 40 per cent of first year premium and 10 per cent in subsequent years.
Deepak Mittal, MD & CEO of Edelweiss Tokio Life Insurance said that directionally, the guidelines are the right step and allows insurance company boards and allows to have flexible incentives based on performance and business quality.
Even in motor insurance, commission of 10 per cent for 1st year and 2nd year of registration of vehicle will be payable whereas it will be 15 per cent from third year onwards.