Last month, IRDAI has allowed car dealers to distribute motor insurance policies by becoming motor insurance service providers (MISPs). The insurance regulator had allowed insurance companies to pay up to 22.5% of total premium as the commission in 2 wheelers and 19.5% of the total premium for other vehicles such as cars and SUVs to MISPs. This commission structure is applicable only on premium charged towards ‘own damage’.
In order to bring in some parity between the commission structure of motor insurance service providers (MISPs) and other intermediaries like agents and brokers, the insurance regulator has hiked the commission structure of agents on two wheeler motor insurance policies to 17.5% of the premium.
So far, general insurers were paying up to 15% as commission on such policies.
However, commission payable to four wheelers like cars and SUVS remains unchanged at 15% on comprehensive motor insurance policies. In addition, IRDAI has allowed insurance companies to pay 2.5% of annual premium on the third party portion of comprehensive policies from fourth year onwards. That means, there will no commission on the first three years on third party portion of comprehensive policies. Premium of comprehensive motor insurance policies has two components – third party and own damage.
On standalone third party policies, which are mandatory in India, the insurance regulator has kept commissions under such policies at 2.5% of annual premium.
