Regulations for commission of insurance workers likely in March

Regulations for commission of insurance workers likely in March

  • February 11, 2016  
  • |  
  • UPDATED   18:21 IST
T S Vijayan, Chairman, IRDA

Insurance regulator IRDAI today said final regulations for commission of insurance brokers are expected to be released by next month.

"A sub-committee has been formed which will decide on the quantum of cap on commission... though the cap on commission and other remunerations for insurance brokers cannot be removed," Insurance Regulatory and Development Authority of India (IRDAI) Chairman T S Vijayan said here.

Asked if IRDAI is ready to discuss quantum of cap with the brokers, he said, "...discussion is a continuous process... sub-committee is discussing all this. I hope to bring the final regulation by March."

Vijayan was here to release the report Vision 2025: Broker-Driving customer centric growth at the Insurance Brokers Association of Indias (IBAI) 12th annual summit. The report was published in association with Ernst & Young.

IBAI president Sanjay Kedia said, "We have requested that let the market forces decide what should be the remuneration depending on the value each market participant is adding."

The report estimated that the broking channel had the potential to contribute 40 per cent of the gross direct premium in the non-life insurance business and 1.6 per cent of the new business premium in the life insurance business in the coming years.

Kedia said, "The brokers share of the total non-life insurance market is 27 per cent at around Rs 20,000 crore and is expected go to Rs 1,60,000 crore."

According to the report, in FY15, the total premium was Rs 83,048 crore in the non-life segment and this is likely to rise to Rs 4,00,000 crore in FY25, if progressive actions are taken.

Similarly, for the life insurance segment, new business premium ?- at Rs 1,13,327 crore in FY15 -? is tipped to rise to Rs 4,60,000 crore by 2025. The non-life insurance segment will grow at 13-17 per cent CAGR in the next 10 years, while the life insurance market will increase 11-15 per cent in the same period.

Earlier, addressing the summit, Vijayan said financial intermediation could itself become a challenge and hence, it has to be relevant going forward.

The challenge before industry and brokers association is to remain relevant for the times and change with the times, Vijayan said, adding "the need of the hour is to keep pace with the changing times, environment, economy and tune the responses to the best of the people, society and everyone else."