On April 1, IRDAI introduced new rules that could increase insurance penetration in the country. Let us look at the new rules in the article.
India is an under insured country wherein insurance penetration was 4.2% in FY21. With new rules IRDAI has removed cap on commission for insurance – life insurance, general insurance and stand alone insurance companies. To put simply, it means that insurance companies can now pay to agents without adhering to specific limits provided they stay within management limits.
Some highlights of new rules include –
- Insurance companies can prescribe their commission payout limits which should be approved by the board.
- Rewards and benefits that insurance companies paid to their distributors should be subsumed within the commission.
While players from the insurance industry have largely welcomed the measures saying insurance penetration will rise further, some of them do feel that new measures could be an advantage for large insurance players as new measures could restrict the incentives for small players. From consumers point of view, commission prices are unlikely to increase or decrease. But misspelling of insurance products could happen if extravagant commissions are paid to the agents.
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