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Insurance IRDAI legalizes incentivizing agents with gifts

IRDAI legalizes incentivizing agents with gifts

IRDAI has allowed insurance companies to reward insurance intermediaries with incentives in the form of gratuity, insurance cover, promotional gifts, office expenses etc.
Nishant Patnaik Feb 23, 2017

IRDAI has allowed insurance companies to reward insurance intermediaries such as individual agents, corporate agents, brokers, web aggregators and insurance marketing firms, with incentives. The rewards would be paid in the form of benefits such as insurance cover, gratuity, office expenses, promotional gifts etc.

While the insurance regulator has allowed life insurers to pay up to 20% of the first year commission as rewards to insurance intermediaries, such incentives would go up to 30% of the first year commission for insurance agents in general insurance.

However, this time, IRDAI has clarified that the agents whose revenues is more than 50% from other than insurance intermediation, are not liable to get such incentives. Simply put, banks and large distributors will not benefit from this move. “No reward shall be paid to an insurance intermediary whose revenues from other than insurance intermediation activities is over 50% of their total revenue from all the activities,” says IRDAI.

Currently, insurance agents are getting higher commissions and rewards as compared to brokers. However, IRDAI has streamlined the commission structure of agents and brokers in order to bring parity.

Meanwhile, the insurance regulator has clarified hereditary commission will be given to the legal heirs in an event of death of an agent.

In addition, insurance companies have been mandated to put in place a mechanism to serve orphan policies. Orphan policies are those policies, which are abandoned by agents who have quit their profession. Typically, insurance companies allot orphan policies to individual insurance agents whose license is in force.

6 Comments
Surendran · 1 month ago
It is a good move for the field workers of insurance and mutual fund, their true work's are positively measured in this declaration
GEORGE SEKARAN · 1 month ago
Motor dealers who are tied up with GI companies who mostly initiate the first insurance policy on new vehicles indulge in rebating in Kind by way of addl free service,discount on spare parts etc thus choking tied agents. . Sec 41 of insu act applies to them also and IRDAI should intervene and put a full stop to such rebating in kind.
Reply
Rahul Srivastava · 1 month ago
SEBI must learn from its counterpart regulators -how to improve business quality and optimum support to its members who are it to this business.Direct plan is good in the favour of business but up to which extent. Can we get any other product other then the mutual fund directly from the manufacturer. This is not the way of doing business. Jago SEBI Jago!
Arun Gupta · 1 month ago
Nice Steps, SEBI should also aware and learn from IRDA
sanjay Mishra · 1 month ago
good step by sebi but i am unable to understand why sebi/irda not opening the door to sell all insurance companies product to a qualified arn/irda/cfp holder. this will help to boost not only agents income but also customerwill get good products and services . regards, sanjay mishra
thomas · 1 month ago
It is really apreadabl . IRDA decision . agents long term demands is going to fulfill.
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