IRDAI to bring first-year commissions of intermediaries down to 20%

New Delhi, Aug 26 (KNN) The Insurance Regulatory and Development Authority of India (IRDAI) has proposed to reduce the first-year commissions of intermediaries to 20 per cent which will benefit policyholders.

If the regulatory body’s draft paper is finalised the first-year commission cap on retail regular premium policies could be lowered from 35 per cent to 20 per cent, reported Money Control.

There have been complaints about intermediaries pushing unsuitable life insurance products to individuals – for instance, unit-linked insurance policies (Ulips) and long-tenure traditional endowment policies to senior citizens.

The agents do this without informing them that their advanced age could eat into potential returns.

Now, in its draft paper on ‘Payment of commission or remuneration or reward to insurance agents and insurance intermediaries’ released on Tuesday, IRDAI has proposed changing the commission structure.

The proposals include more stringent ceilings on commissions that can be paid to life and general insurance intermediaries.  (KNN Bureau)