Insurance Max Life and LIC are most generous in paying commission

Max Life and LIC are most generous in paying commission

Max Life has paid 6.5% of total premium or Rs.1,236 crore to agents in FY 2021.

Feb 23, 2022

Max Life and LIC are the highest commission paying life insurers in India as their commission outgo is in excess of 5.5% of their total premium income, shows LIC's draft IPO prospectus.

Max Life pays the highest commission to agents. The private insurer has disbursed 6.5% of its total premium income to its agents as commission in FY 2021. LIC comes in next with commissions amounting to 5.5% of total premium.

In FY 2021, Max Life and LIC have collected total premium of Rs. 19,020 crore and Rs. 4,03,290 crore respectively. This implies that Max Life has paid Rs. 1,236 crore and LIC disbursed Rs. 22,180 crore as commission in the previous financial year.

Among the top five private players, SBI Life pays the least percentage of premium as commission at 3.5% (FY2021). Agents of HDFC Life, ICICI Prudential Life and Bajaj Allianz Life have received commission of 4.4%, 4.2% and 4.8% respectively in FY 2021.

Comparing the commission payment with new business premium (FY 2021) shows that Max Life has the highest commission ratio at 18%, followed by LIC (12%) and ICICI Prudential Life (11.3%).

The high commission payouts reflect the high dependence of life insurers on individual agents. In the draft IPO prospectus, LIC states that its individual agents’ network contributed approximately 94% of its new business premium in FY 2021.

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5 Comments

Investor · 2 years ago `

Why doesn't SEBI investigate how IRDA allows so high commissions while promoting insurance products to as investments.

Hiren · 2 years ago

SEBI and IRDA both are different bodies. Both comes under GOI Finance ministry.

Secondly and most Importantly Life Insurance is toughest advisory business model to Solicitate, hence commission are always higher then other financial products globally. Unfortunately in India the commission has already been lowered over last 8-10 years where market is still so low penetrated compare to other developed countries.

Dinesh Singh Kushwaha · 2 years ago

Insurance is not an investment product. So commission needs to be high.
It's the mistake of Insurance companies and agents which sell it and the customers themselves which purchase it as investment product.

Prashant · 2 years ago `

This is an utter lie. Maxlife pays lowest commission in the entire industry in india as well as the world. You want proof I can provide all proofs of the commission paid to agents. This would clearly mean that Max pays highest commissions to brokers like policybazaar and Banks.

Ashish · 2 years ago `

I completely agree with Mr. Prashant, Max Life pays The Lowest Commission in the Industry, this I got to know when I got calls from other Insurance Companies to also join them and they shared their Commission Structure. Whatever Commission Max Life pays is also linked with other T&C.
Other Insurance Companies pay commission without any T&C, based on simple calculation.
During the discussio with Max Life Regional Mgr, they asked me to promote one product on which they paid 3.5% commission, whereas TATA pays 30% FY commission and renewal 5% commission on the same product. I questioned him who are you giving the difference of 27% worth of commission and that they were not even giving equivalent to renewal commission of Tata in the FY.
So, after that I stopped working with Max Life and working with Many other Companies.

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