CNBC-TV18 Exclusive | Insurance agents are not required to disclose the commission earned on the policy

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Last update: September 08, 2022, 4:38 PM HST

Previously, IRDAI had proposed a 20% cap on the commission of insurance company agents.

The proposal to require insurance agents to disclose commissions on policy documents also met with resistance from the Life Insurance Corporation (LIC) and agents.

The Insurance Regulatory and Development Authority of India (IRDAI) has dropped the proposal for mandatory disclosure of commissions on policy documents. The insurance regulator believes disclosing commissions could discourage insurance agents, sources told CNBC-TV18.

“The regulator also believes that insurance agents are important for the distribution of insurance. Additionally, mandating agents can negatively impact business,” the sources said.

Accordingly, agents will not be required to disclose commissions earned on police documents.

The proposal to require insurance agents to disclose commissions on policy documents also met with resistance from the Life Insurance Corporation (LIC) and agents.

Previously, IRDAI had proposed a 20% cap on the commission of insurance company agents. It also released a draft consultation paper on commission limits.

In another development, the regulator has made it mandatory to dematerialize new insurance policies by December 2022. The insurance regulator has also asked insurance companies to dematerialize existing/old policies by December 2023.

Insurance policies could be dematerialized with National Securities Depository Limited (NSDL), Central Depository Services (CDSL) or Karvy.

Dematerialization consists of converting a physical font document into an editable online object. This means that a person will no longer need to indulge in paperwork at the time of policy renewal. It aims to reduce transaction costs and ensure rapid policy changes.

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