The Insurance Regulatory and Development Authority of India (IRDAI) has rejected the proposal to require agents to disclose their commissions on policy documents.
Sources said this was because the regulator reportedly felt that mandatory disclosure of commissions could discourage insurance agents, according to an exclusive by CNBC-TV18.
“The regulator also feels that insurance agents are important for insurance distribution,” the report quoted the sources as saying. “Moreover, mandating agents may impact business negatively.”
Among those who opposed the mandatory disclosure of commissions were Life Insurance Corporation (LIC) and its agents.
According to a recent study, offline insurance agents remain Indians’ preferred insurance distribution channel, despite the rise of online insurance sales.
Last month, IRDAI proposed a limit of 20% on insurance agents’ commissions, with an accompanying draft consultation paper. The regulator is also requiring all new insurance policies to be issued in dematerialised or electronic form by December 2022. All older and existing policies should be dematerialised by December 2023.
With dematerialised policies, the customer no longer needs to fill up paper forms when renewing the policy. According to the regulator, this move aims to reduce transaction costs and allow quicker modifications to policies.
