Commission paid to life insurance agents has been rising steadily. Prudent Corporate Advisory's draft IPO prospectus shows that commission outgo of life insurance players grew at 9.6% CAGR since FY 2015 to reach Rs 30,830 crore in FY 2020. Overall, commissions went up 58% in five years.
"The commissions paid by the life insurance players increased at 9.6% CAGR during the five years ending fiscal 2020 to Rs 308 billion (30,830 crore), despite the increasing share of direct channel in new business premium," the document said. "The commission paid to the channel partners as percentage of total premium has dropped from 5.9% in fiscal 2015 to 5.4% in fiscal 2020," it added.
Citing a CRISIL Research report, Prudent said life insurance sale through agents is expected to record robust growth in coming years. “The low penetration of life insurance, rising financial awareness amongst people will further ensure growth across distribution channels. Lower ticket size products distributed through micro insurance agents and PoS channels to customers in smaller towns and cities is also expected to witness strong growth going forward and aid the intermediaries serving the segment," it said.
'Retail health insurance premium to go up'
Retail health insurance premium is expected to register a robust growth of 24-26% CAGR between FY 2021 and FY 2026. The document sees the amount touching Rs 80,000 crore by FY 2026. During the period, share of retail health premium in total health insurance premium is projected to rise from 45% to around 60%.
