IRDAI, in a draft circular, has proposed that insurance intermediaries like brokers, insurance marketing firms and corporate agents (banks) would be rewarded higher than agents as they have higher establishment and compliance costs. The rewards would be paid in the form of benefits such as insurance cover, gratuity, office expenses, promotional gifts etc.
While the insurance regulator has proposed to allow up to 40% of the first year commission as rewards to insurance brokers, such incentives would be up to 20% of the first year commission for insurance agents.
IRDAI has said, “Reward based on an objective and transparent criteria to insurance agents or insurance intermediaries over and above the commission or remuneration being not more than 20% of first year commission or remuneration in case of individual insurance agents and 40% of first year commission or remuneration in case of insurance intermediaries.”
Currently, insurance agents are getting higher commissions and rewards as compared to brokers. However, IRDAI has proposed to streamline the commission structure in order to bring parity.
Meanwhile, the insurance regulator has clarified that hereditary commission will be given to the legal heirs in an event of death of an agent.
Also, insurance companies have been mandated to put in place a mechanism to serve orphan policies. Orphan policies are those policies which are abandoned by agents who have quit their profession. Typically, insurance companies allots any orphan policies to individual insurance agents whose license is in force.
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