IRDA can remove cap from commissions paid to the agents for selling insurance policies.
The much-awaited insurance bill has finally made its way after a logjam of six years. Lok Sabha has passed the Insurance Bill on Wednesday, paving way for implementation of 49% foreign direct investment in the insurance sector. However, the bill needs to be passed in Rajya Sabha.
Earlier, the BJP led government had taken ordinance route.
Along with the hike in FDI in insurance, the bill has a provision relating to agent commissions. The bill will give IRDA the flexibility to review, monitor and decide the commission structure of insurance agents. With the implementation of insurance bill, IRDA can remove cap from commissions paid to the insurance intermediaries for selling insurance policies. Removal of such cap will give insurers the freedom to decide the commission structure on their own.
However, the bill has increased penalty on mis-selling by agents. Also, the bill has proposed an imprisonment of up to 10 years for selling policies without registration with IRDAI.