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The government is likely to introduce Insurance Amendment Bill 2023 in the upcoming monsoon session. Under this bill, the government has proposed that general insurance companies should pay share of their profits to insurance agents. It said that the agent should be entitled to the payment of a share in the profits of general insurance business.
Another key proposal was payment of bonuses through additional remuneration to agents so that they can remunerate their staff or employees. However, such a payment should be made on uniform basis.
However, the government proposed that IRDAI will continue to hold power to specify regulations, remuneration by way of commission or otherwise that an insurer may pay to agent. In addition, IRDAI will specify the code of conduct for an insurance agent.
The government also proposed that at least three persons in the life insurance council and general insurance council should represent insurance agents, intermediaries and policyholders.
Among other key proposals were:
- Insurance companies can open different lines of business like life, non-life, health and reinsurance through a single license. If the proposal goes through, agents will be able to offer multiple products. Currently, they can have tie up with three insurers – one each in life, non-life and standalone health.
- Government also proposed that insurers should be allowed to sell other financial products like mutual funds. However, there is no clarity on execution of this proposal as SEBI regulates market related products like mutual funds and PFRDA regulates NPS
- IRDAI should do away with stringent paid up equity capital norms in which life insurance, general insurance and health insurers have to maintain paid up capital of Rs.100 crore
