Life insurers paid gross commissions of Rs.22,100 crore in FY 2016-17

24 life insurance companies have paid gross commission of Rs.22,100 crore to their intermediaries such as banks, brokers and agents last fiscal, shows data collated from the companies websites. These life insurers disbursed commission of Rs.20,244 crore in FY 2015-16 indicating 9% a growth in commission payouts.

The top 10 life insurers account for 93% of overall commission paid to various distribution channels. These companies have paid out Rs.20,581 crore as commission last fiscal.

Experts attribute this to increase in new business premiums and improving renewal ratios. While the life insurance industry has received new business premium of close to Rs.1.75 lakh crore, state owned LIC and top private life insurers have improved their renewal rates and business efficiency.

Amongst the top ten life insurance players, LIC has paid gross commission of Rs.16,590 crore in FY 2016-17 as against Rs.15,477 crore in FY 2015-16, an increase of 7% in its commission expenses.

Among private life insurers, HDFC Standard Life Insurance paid the highest commission to their agents. Its commission expenses grew by 13% to Rs.792 crore in FY 2016-17. HDFC Standard Life is the fourth largest life insurance company in terms of AUM. It manages AUM of Rs.91,800 crore as on March 2017.

SBI Life and ICICI Prudential Life followed HDFC Standard Life by paying gross commission of Rs.783 crore and Rs.758 crore respectively.

In terms of increase in percentage, Bajaj Allianz Life Insurance registered highest growth with an increase of 266% in its commission expenses. The company has paid gross commission of Rs.535 crore in FY 2016-17 as against Rs.141 crore in FY 2015-16.

Commenting on the this increase in commission payouts, Manish Sangal, Chief Agency Officer, Bajaj Allianz Life said, “We only recruit serious agents and ensure that they stay with us for the long term. We have witnessed an increase of over 39% in new business premium collection, largely due to our agency channel.  Agent productivity has been growing and this has directly reflected in our business premium collection.”

Barring Kotak Mahindra Old Mutual Life Insurance, all the other life insurers witnessed an increase in their commission expenses.

An increase in the commission expenses of the insurer indicates that the company is either expanding its distribution channels or providing lucrative compensation to its agents and brokers.

Commission expenses of top ten life insurers

Source: Company disclosure