The latest Life Insurance Council (LIC) data shows that the life insurance industry has disbursed gross commission of Rs. 20,823 crore in April-December 2019 as against Rs. 18,164 crore in the corresponding period preceding fiscal, an increase of 14.6% in a year.
IRDAI data shows that during the same period the industry has received new business premium collection of close to Rs.1.94 lakh crore from 2.05 crore policies.
Considering that the life insurance industry has over 21 lakh agents, a rough calculation shows that the average earning of an agent is close to Rs. 99,157 in the first nine 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. The higher the tenure, the more would be the upfront commission. The insurance regulator has fixed the trail commission at 7.5% throughout the premium paying term.