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.