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India’s insurance regulator, the Insurance Regulatory and Development Authority of India (IRDAI), is set to come out with draft regulations on regulating insurance commissions, M Nagaraju, Secretary, Department of Financial Services, said.
The move comes as the government looks to empower IRDAI to tighten oversight on distribution costs across the sector.
M Nagaraju, Secretary, Department of Financial Services (DFS), said the government is keen to empower IRDAI with greater authority over distribution expenses, including commissions paid by insurers. The objective is to ensure that commissions remain within reasonable limits and do not end up hurting policyholders.
“There have been complaints that some insurance companies are paying very high commissions. As a result, premiums go up or the ICR becomes low,” Nagaraju said, speaking exclusively to CNBC-TV18.
He added that policyholders ultimately suffer when commissions are excessive or when the incremental capital ratio (ICR) is weak.
According to Nagaraju, reforms under the Insurance Act are expected to lead to tighter control over how much commission is paid and the manner in which these payments are made. He underlined that the government wants IRDAI to have clear regulatory powers so that “nobody is paying too much commission.”
The government has already empowered IRDAI to set limits on commission, remuneration, and rewards paid to insurance agents. Under the Insurance Amendment Bill, insurers are also required to submit detailed disclosures on expenses of management, providing the regulator with greater visibility into cost structures.
The move comes as the government looks to empower IRDAI to tighten oversight on distribution costs across the sector.
M Nagaraju, Secretary, Department of Financial Services (DFS), said the government is keen to empower IRDAI with greater authority over distribution expenses, including commissions paid by insurers. The objective is to ensure that commissions remain within reasonable limits and do not end up hurting policyholders.
“There have been complaints that some insurance companies are paying very high commissions. As a result, premiums go up or the ICR becomes low,” Nagaraju said, speaking exclusively to CNBC-TV18.
He added that policyholders ultimately suffer when commissions are excessive or when the incremental capital ratio (ICR) is weak.
According to Nagaraju, reforms under the Insurance Act are expected to lead to tighter control over how much commission is paid and the manner in which these payments are made. He underlined that the government wants IRDAI to have clear regulatory powers so that “nobody is paying too much commission.”
The government has already empowered IRDAI to set limits on commission, remuneration, and rewards paid to insurance agents. Under the Insurance Amendment Bill, insurers are also required to submit detailed disclosures on expenses of management, providing the regulator with greater visibility into cost structures.
