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Soon, life insurers will offer trail commission like structure to their agents similar to mutual funds.
IRDAI has reportedly discussed with the CEOs of life insurance companies to do away with the high upfront commission of life insurance agents in the first year.
In fact, the regulator is looking at introducing levelling commission structure throughout the policy term to improve persistency ratio, said two senior officials requesting anonymity.
A senior official requesting anonymity said that the insurance regulator wants the life insurance industry to learn from the exponential growth of mutual fund industry despite ban in upfront commission. He said that IRDAI believes that instead of paying higher upfront payouts in the first year, the industry should spread it over the years to ensure better renewal.
This practice is already prevalent in ULIPs, non-life insurance and health insurance industry.
Another official said that the insurance regulator wants life insurers to pass on the benefits of lower commission to policyholders to make the premium amount more affordable.
