The Insurance Regulatory and Development Authority of India (IRDAI) is weighing more time for intermediaries to comment on proposed commission and expense changes, NDTV Profit reported, as the proposals could reshape insurance distribution costs.
In its Oct. 22 report, citing unnamed sources, NDTV Profit said the regulator may consider requests selectively and that no decision had been made. IRDAI’s published consultation materials list Sunday, Oct. 25, as the deadline for comments.
IRDAI released its two-part consultation paper, Recalibrating Economics of Insurance Distribution, on Sept. 23. The proposals include commission caps that vary by product and distribution channel, three groups for distribution participants and commission clawbacks in mis-selling cases.
The paper would also phase down insurers’ expenses of management (EoM) limits. For life insurers, the proposed limits would reach 15% of gross direct premium income within two years and 12.5% within five years. For general insurers, the proposal would shift the limit from 30% of gross written premium to 20% of domestic gross direct premium income within five years.
Moneycontrol and Business Standard reported on Oct. 6 that the Insurance Brokers Association of India had asked IRDAI to move the response date to the end of December. Brokers have raised concerns that lower commissions could make it harder to serve customers with smaller policies. They have also questioned whether any reduction in distribution costs would benefit policyholders, according to reports by Mint and Business Standard.
IRDAI says the proposals aim to lower distribution costs and improve value for policyholders. Mint reported Oct. 15 that IRDAI Chairman Ajay Seth said another round of draft regulations and public consultation would follow the current process. The consultation materials set Sunday, Oct. 25, as the next date for submissions.
