The latest data from the industry trade body, Life Insurance Council (LIC) shows that the life insurance industry has disbursed gross commission of Rs.11,528 crore in April-September 2018 as against Rs.10,033 crore in the corresponding period preceding fiscal, an increase of 15% in a year.
IRDAI data shows that during the same period the industry has received new business premium collection of close to Rs. 93,000 crore from 1.16 crore policies. A rough calculation indicates that life insurance industry pays 12% of its new business premium as gross commission to their agents.
Considering that the life insurance industry has 20 lakh agents, a rough calculation shows that each agent has earned close to Rs.58,000 in the first six months.
Experts attribute this increase to IRDAI’s decision to hike the commission structure of insurance agents under various policies in 2017.
While the first year commission of traditional policies like whole life, endowment and money back having over 12 years of premium payment term is 35% of annual premium, insurers can pay up to 15-33% of annual premium on policies having premium paying term of less than 12 years depending on the tenure. Higher the tenure, more would be the upfront commission. The insurance regulator has fixed the trail commission at 7.5% throughout the premium paying term.
The life insurance industry had assets under management of Rs.34 lakh crore in FY 2017-18.