IRDAI has modified reporting norms for insurance companies to disclose payouts of agents and brokers. The insurance regulator has asked insurers to disclose commission and rewards of agents separately.
So far, insurance companies were required to report details of policies sold and commission paid to agents and brokers in a prescribed format. Insurers had to submit details of first year commission, commission on single premium policies, renewal commission and additional payout within one month of the completion of every financial year i.e. before April 30. However, such a reporting format did not capture information on rewards.
Earlier in February 2017, IRDAI had allowed insurance companies to reward insurance intermediaries such as individual agents, corporate agents, brokers, web aggregators and insurance marketing firms with incentives. The rewards could 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 go up to 30% of the first year commission for insurance agents in general insurance.
In a circular, IRDAI said, “ln order to ensure consistency, uniformity and fair presentation, it is hereby advised that rewards and/or remuneration to agents, brokers or other intermediaries shall be shown as part of head "Commission" in the financial statements. Rewards shall be shown as a separate line item in Schedule 2 "Commission", below the line "Net Commission" in the financial statements.”
Further, IRDAI has asked insurance companies to disclose remuneration of senior management of insurance companies including MD, CEO, whole time directors and so on.
