Next time when you ask your clients to renew their insurance policy directly through insurance companies, you will not get any commission.
In a recent circular, IRDAI has asked insurance companies not to remunerate agents and brokers on insurance policies directly received from customers. IRDAI has found that insurance companies have paid commission to their agents and brokers even when they receive new and renewal business directly.
Sujay Banarji, Member (Distributor), IRDAI said, “It has come to the notice that insurers are paying remuneration to insurance intermediaries for new and renewal insurance business received by them directly. Therefore, the authority advises the insurers not to book new/renew the business directly received from customer/insured in the name of the insurance intermediaries and shall refrain from remunerating them for such direct new/renewal business. Further, no insurance intermediaries shall receive remuneration from insurers on insurance business directly received by the insurer from the customer/insured.”
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 direct sales channel had contributed 6% of new individual business premium in FY 2017-18. While LIC had sold 1.47% of its individual new business directly, private insurers sold 11% through direct sales last fiscal. However, in group business, both LIC and private players have sold majority of policies through direct sales.