Insurance Bill to deter mis-selling

CAP ON INSURANCE COMMISSION WILL ENABLE COMPETITIVE PRICING OF POLICIES

- SAIKAT NEOGI

AS THE INSURANCE Amendment Bill passed by Parliament caps agents' commissions policyholders will benefit because incentives shift from volume-driven sales to needs-based advice. It will help reduce policy lapses and claim disputes over time.

The cap on commission is an important consumer-protection measure which will enable competitive pricing of insurance policies.

Higher penalty

The regulator can now disgorge wrongful gains made by insurers or intermediaries and impose much higher penalties—from ₹1 crore to ₹10 crore for violations. “This improves deterrence against mis-selling, unfair practices, and noncompliance,” says Shilpa Arora, co-founder and chief operating officer, Insurance Samadhan.

The cap on commission is a step towards a healthier and more customer-friendly insurance market an will help create a stronger framework to deter mis-selling.

Premiums are driven by several factors—claims experience, medical inflation, reinsurance costs, solvency requirements, and regulatory norms. Commissions are only one part of the cost structure.