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Insurance No commission if your clients renew their insurance policies directly

No commission if your clients renew their insurance policies directly

IRDAI has found that insurance companies have paid commission to their agents and brokers even when they receive new and renewal business directly.
Nishant Patnaik Jan 30, 2019

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.

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49 Comments
jAY · 2 weeks ago
IT WOULD BE LIKE WE ARE FINDING BUSSINESS & DUE TO DIGITALIZATION THE CLIENT PAYS ONLINE , WHAT WE AGENTS GET IS ZERO & EHAT CLIENT WILL DO THEY WILL CALL AGENTS AGAIN & AGAIN FOR SERVICE...
WHY WOULD AGENT GIVE SERVICE IF THEY DONT GET RENEWAL COMMISION ON ONLINE PAYMENT ????
NOT A GOOD IDEA OF "NO COMMSION"
Sandeep · 1 week ago
I think this move is relevant for General Insurance sector....Life insurance won't be impacted
Pranab · 2 weeks ago
But it can be better if client have option of change insurance advisor..Commission to b given to advisor go gives services to client...How can client b benefitted with this move,it will b beneficial only for insurance company who will b benefitted on non payment of commissions.
VIB · 2 weeks ago
good suggestion i do agree .
Vikas gupta · 2 weeks ago
I also agree.
Rajesh · 2 weeks ago
Yes I agree with Mr.Pranab who actually put a point to help customers with the help they are deserved and required.
Rajendra · 2 weeks ago
I agree with the article. The same amount should be given to the customer as a concession in the payment, as they are most valuable to the company
Manoj · 2 weeks ago
I also Agree
Ashish · 2 weeks ago
I also Agree
Reply
Sunil · 2 weeks ago
Even though customer pays premium online the respective advisor gives so many other services like loan processing and its paper submission & other advices related or not related to financial sector at free of cost, just bcoz of he is assured of getting renewal commission at least from one source I. E LIC Renewal. Even though they r paying online still they talk with us 3-6 times a year for various reasons. Cost of these man-hours r usually goes free bcoz we people r assured of getting renewal commission at least. Stopping of commission on online renewal will hamper services & relations with clients.
joel · 2 weeks ago
Agree with you sunilji
Bhavin J Shukla · 2 weeks ago
Absolutely Agree. Policy holders should have the right to Change the Advisor as already prevalent in Mutual Funds. Or if he wants to opt out of his Advisor, then he should be given discount in Premium.

Unless such changes occur, all other changes would just go on to nullify the importance of Rights of Policyholders.

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If there is one person ( or even more than 10 persons) who will take the responsibility that I have designed the following resolutions and rules which everyone should adhere to, then that person(s) should come out in open bravely and face the Advisors and answer why they are doing.

They are extremely insensitive and insecure themselves.

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Prashant · 1 week ago
Well here is a news for you. Policyholder can change the agent and in that case the insurance company has to give renewal commission to the reasiigned agent for giving his services to clients. Now the catch is from the time this regulation came in existence the companies have stopped reassigning the policies to other agents. Please look at the design of regulations and company actions on them. The companies just want to make profits and not only that but extra profits so IRDAI helping them to do this. Texently section 44 removed which guaranteed us the renewal commission throughout the policy period even if we resign or get terminated after 5 years or if we die. This provision is completely removed so the business been brought and serviced for as long as 50 years also we lose. Who does this benefit? This has no effect on clients as nothing changes for them. It benefitted few companies at the cost of lakhs of agents so why was this move made?
Reply
Ashok gohil · 2 weeks ago
I understand this is for all types of insurance. It is great injustice to agents, who explained the whole scheme/plan to the customer, made lot of efforts to made him understand plan, went several times to him whenever some issues/problems arosed. If it is in insurance, then should be made mandatory in all service sectors viz.banks where AGMs/DGMs get incentives without making efforts/going to customers, getting foreign tours on performances of agents. Where is the justice ?
Chitranjan khandal · 2 weeks ago
Whether the client paid directly or whether services to client r provided by some other agent, the client should be provided option whether he wants to continue with same agent or wants to choose another agent at every payment of premium and other services interaction
Vikas Gupta · 2 weeks ago
I also agree.
Reply
Dillip Kumar Swain · 2 weeks ago
It is better to eradicate agency system. In d name of agency employees are getting high bonus on misselling by agents.employee should sell and getting salary. If possible irda members should be trainer for insurance employee
vikas Gupta · 2 weeks ago
I also agree.
Reply
Dagadu Wani · 2 weeks ago
Agent lot of afford to get policy new.
Three or Four time's he want to his home or office.So it's unjustified stop renewal commission.
Today most of policy holder pay online or ECS so what about his commission?
IRDA only looking interest for policy holder & company's.
Not thing about agent afford.
P m babu · 2 weeks ago
I do agree. I made followup with person for one year. I got policy. Spent daily 10 minutes . On this i am getting ine more policy
If there is no benifit for this effort. Abolish agency channels. Un emploent also will increase. Though on line renewal is there. Wherr support for services after sales without agent
Reply
Mahesh · 2 weeks ago
How IRDA is going to stop the practice where the clients seek advise from the agents and then buy online because its cheap. What IRDA is doing to protect the interest of Agents in such cases. IRDA needs to study as to how many times and how many the clients make que in the office of insurance companies to buy fresh insurance. This is will help IRDA to understand the agents role. If IRDA is aware about the cost and the effort of agents to get the business. These IRDA official , who are sitting in AC office take such decisions, should be sent to the places and should be asked to get the insurance policies with targets. So that they realize, understand and have the practical experience. One more option could be - The concept of agent should be finished once for all immediately and insurance companies should have only their staff on pay roll. Then the truth will come out soon. It seems there is some hidden agenda going on to reduce the employment opportunities offered by insurance sector. Government of India should take note of it.
Vikas Gupta · 2 weeks ago
I also agree.
Prashant · 1 week ago
Wrong buddy. IRDAI is formed only to protect and safeguard companies's profits whether it comes ast the cost of agents or investors it doesn't matter
Reply
jAMES bond · 2 weeks ago
No Service as well if No Commission on Renewed Policy.
Debraj · 2 weeks ago
But I doubt how it can be conclusively proved that the agent has no role in the collection of renewal premium as now there are multiple payment options available with customer to pay the renewal. The fact that the customer was influenced by the agent to pay the renewal remains unknown in may such payments.
Rajesh Gupta · 2 weeks ago
Big lobbies are working behind this to make everything direct to benifit big giants at the cost of poor agents. Who will pay for going to 10 people and get business from 1.We are made to play in their hands. Latter it will come in all types of insurance business. 40% business in Mutual Funds already gone in direct.
Pavan Mundra · 2 weeks ago
But if you see, insurance agents gets highest commission of say 20-25% on first year and later on renewal commission of 5%. While In mutual Funds the SEBI has reduced the Commission almost by 50%. Still Mutual Fund Distributors are Happy. And all benefits is given to clients even SEBI restrict overall expenses of the AMC. I suggest it should be implemented with IRDA also.
Vikas · 2 weeks ago
There should be parity in MFs & Insurance Buisnesses.
Prashant · 1 week ago
Pawan you are wrong. It is not the percentage that counts but the amount of commission counts which is much higher in mutual funds compared to insurance (Insurance pays commissions on premiums and in mutual funds we get commissions on the entire AUM)although insurance is much harder to sell compared to a mutual fund. So your comparison is completely faulty and wrong.
Reply
Satish Sinha · 2 weeks ago
As per me this is backdoor entry of direct plan just like direct plan of MF.
Gaurav · 2 weeks ago
I don't think it's going to work out as Insurance company not able to serve properly direct customer... In this scenario Agent rolls end.... Its something illogical thought
KANDIMALLA VENKAT REDDY · 2 weeks ago
This is not correct thinking, agents are doing hard work for motivation to customer take a Insurance policy
SUBRATO · 2 weeks ago
Similarly Branch Managers, Division Manager,Zonal Manager & others Management post also every staff didn't get salary if business target not fullfill monthly wise and also if they don't do their office work in proper way & proper time such as issue of original policy bond,loan , revival surrender etc.Everyonebe observed under CC TV camera then their monthly salary will be fix. Why only Agent are suffered.
Dipen Shah · 2 weeks ago
It is not clear from the circular, whether it is talking about life insurance policies or General Insurance policies.
ASHOKE PANDA · 2 weeks ago
Ok that's good decision from IRDA and respect IRDA regulations.But there is not so educated customer to get every benefits time to time properly like maturity claim,loan,loan repayment,nominee change,death claim,renewal premium, salary savings scheme hazard and etc. from insurance company.That time only an agent can handle all the things,if customer can't do everything that's the benefits of insurance company.A lots of problem arised from customer regularly,and lots of expenses bear by an agent.That time none any customer pay service charge but customer can asked commission at the policy starting time.That is not mentioned at IRDA guidelines.If customer hospitalized that time only an agent help their families to get cashless or reimbursement claims. Yes after all IRDA should stop commission because agent have a huge income from commission because they have built their empire from longtime by paying service and Goodwill.
Kalpana Mondal · 2 weeks ago
It is sad news for Insurance Broker for their Comission
Narendar · 2 weeks ago
This should be done for SIP too. Once a investor invests with a Mutual fund adviser, next month SIP trail should not go to adviser.
Eshwar · 2 weeks ago
There should be no such decisions should govt take, Every Insurance Agent and Advisor do very hard to get sale and it's very difficult also to give service, so there should be No such decisions from govt, they must get the Renewal Commission, that is the only Bread and better for them, Then People stop selling Policy in future
Rajkumar · 2 weeks ago
A customer could not be sales guy so passing concession in premiums paid online is like insurer are bribing the customers to make conspiracy against the the who once sold the said policy to the customer and worked as a bridge in between the insurer and the insured and now the said agent is not required but before it look at the bigger picture and size of population employed in this sector
Reply
Ravi · 2 weeks ago
Rojgaar to paida nahi ho rahe hai aur irda aur sebi ghusa hua hai commission me .jab naukri hi ho to kyo koi agenty kare
Rajesh Jha · 2 weeks ago
What I personally feel is when ever there is change it is good for everyone in long term.
Why irda is taking such steps they should clarify.
If we as an agents n advisors feel that we provide so many other services to the clients then one can charge to client directly or be ready to leave the client at their own..
they will do it directly, if they can, it means our advice is not required for that service, if he is not able to do it it's own, then he will pay happily or may be forcefully that is up to him.
I think instead of discussing what will happen to our commission rather we should think how to upgrade yourself to the level where client will pay to an advisor or agent happily.
Prashant · 1 week ago
Pawan you are wrong. It is not the percentage that counts but the amount of commission counts which is much higher in mutual funds compared to insurance (Insurance pays commissions on premiums and in mutual funds we get commissions on the entire AUM)although insurance is much harder to sell compared to a mutual fund. So your comparison is completely faulty and wrong.
Reply
MD EQUBAL · 2 weeks ago
I am agree with all comment done by agent brothers.It is totally injustice with agent, l propose to agent union , please file a writ petition in supreme court regarding this matter.
Vikas · 2 weeks ago
So the insurance companies will pocket the agent commission,
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