Considering tweaks in insurance commission structure: DFS secy

Changes in the commission structure for distributors in insurance, such as banks, non-banks, corporate agents, individual agents, and insurance aggregators, are being considered at regulatory and policy levels, said M Nagaraju, secretary, Department of Financial Services, Ministry of Finance, on Friday on the sidelines of an event in Mumbai.

- AATHIRA VARIER & ANJALI KUMARI

Insurance recently came under scrutiny for its high acquisition costs, driven by elevated distributor payouts. This has happened even as the central government, to make insurance affordable, has rationalised goods and services tax (GST) on insurance premiums for individual life and health insurance from 18 per cent to zero.

Despite this, high distributor payouts are keeping premiums elevated, which is among the many reasons why insurance penetration has not been much in India. The government and the insurance regulator have given the call “Insurance for All” by 2047.

A committee formed under the Life Insurance Council to review the commission structure in life insurance has recommended capping distributor commissions or deferring them to ease acquisition costs.

At present insurers are free to set product-wise commissions as long as they remain within the overall expenses of management.