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Insurance ‘We would not push insurers to reduce premium in direct plans’

‘We would not push insurers to reduce premium in direct plans’

IRDAI Chief TS Vijayan has said that the insurance regulator is not keen on pushing insurance companies to reduce premium amount on direct sales.
Nishant Patnaik Aug 23, 2017

Answering a query of an intermediary on promoting direct sales, TS Vijayan, IRDAI Chairman said that the insurance regulator has no plans to push insurance companies to reduce the premium amount on direct sales. He was speaking at an industry event  recently in Mumbai.

In fact, Vijayan said that insurance companies should continue to leverage agency channel to grow business. He said that policyholders need handholding of advisors to buy insurance policies.

He further said that distributors play a key role in the growth of the insurance industry. They are the means of communication between insurance companies and consumers. It takes a lot of effort to solicit insurance policies and give after sales services to clients, he said.

IRDAI data shows that direct sales channel in which life insurance companies sell insurance policies on their own through online channel has not taken off well largely due to non-differential pricing. Many companies do not offer different premiums for policies sold through direct and agency channels. They offer uniform premium across distribution channel i.e. agency channel and direct sales.

Only a few companies offer discount of up to 10% in term insurance policies if a person buys it online.

IRDAI data shows, the online sales channel had contributed 0.22% of new business premium in FY 2015-16. Private insurers sold around 42,000 life policies via the online platform whereas LIC sold 4,500 life insurance policies in FY 2015-16.

4 Comments
Harish Bangad · 2 months ago
Dear SEBI, Please learn something from IRDA. How they are concern about both Investors and Distributors. Are they not transparent.
Rahul · 2 months ago
Very Good Mr. Vijayan..

1) Yes, ULIPS are best products and Insurance Advisor must solicit ULIPs for tax saving and wealth creation over any other product as they are high on commissions.

2) Yes, Pls also ban term plans as they are very low on commissions or increase commission to min 40% trail in term plan as premium amount is anyways lower.

3) Yes, Mutual funds with direct plans should also be banned as they offer zero commission and are impacting sales and growth of industry

4) Yes, IRDA is better than SEBI in letting the industry run for sales agents and not for consumers.

5) Pls BAN RIA concept in india as indians are not financially literate enough and need products high on commissions.

6) Yes, its not the demand, but sales of product that is important, so, increase commissions to 50-60% in all insurance products if possible . This will lead to everyone becoming insurance distributor and hence more and more people will get more and more insurance products, so industry will grow and benefit. Wow!

"IRDA's high commission philosophy is in fact only way to go, along with it there must not be any online competition from players who offer low commission options and there should not be direct insurance plans in insurance at all as all such competition is bad and will adversely impact industry.

Dear SEBI - hope you learn how to do business in India from IRDA...
Reply
Kaushik · 2 months ago
Why different rules for mutual funds and insurance
K m SHARMA · 2 months ago
SEBI AND AMFI have never thought of protecting small, self-employment seeking educated youngesters leaving them to face competition from big sharks(institutions like banks etc).
By abolishing upfront commission, these govt. institutions only harmed the interests layman investors, who, these self employment seeking youngesters used to approach, making them learn the very basic
Principles of mutual fund investing.
Small investers do not understand as to why that have to pay a fee to the advisor to invest in mutual fond schemes.
They are not capable of filling forms themselves.
Hence,by denying up-front fee to these advisors, these govt. regulatory bodies
virtually harmed the interests of small
invester community on the one hand and
Creation of a dignified profession to educated unemployed youths on the other.
I have seen many IFA'S leaving this Noble profession for want of sustainable income
and later joining property dealing firms.
If possible, please bring this content in the
notice of regulatory bodies and/or govt. thanks.
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