The Insurance Regulatory and Development Authority of India (IRDAI) has given green light to general insurance companies to revise commission for agents. This means that customers will have to pay more for vehicle and health insurances, among other non-life insurance policies from April 1.
The IRDAI (Payment of Commission or Remuneration or Reward to Insurance Agents and Insurance Intermediaries) Regulations 2016, comes into effect from April 1 2017. The regulations will bring in certain changes in commissions and remuneration rates, apart from introducing a reward system.
“These may trigger insurers to revisit the pricing of their products in so far as the costing input relating to commission/remuneration is concerned,” P.J.Joseph, member (non-life), IRDAI, said in a notification.
The changes in premium rates will be limited to plus or minus five per cent of the existing premium rates of products or add-ons, the notification added.
The price change will also be limited to the aspect of change in commissions and remunerations including reward system, due to the new regulations.
The IRDAI had issued draft regulations last year, in a bid to formalise the incentives insurance companies pay their agents and intermediaries.
This hike in premium rates due to changes in commissions and remunerations will be in addition to the increased premium rates for third motor insurance cover.
Earlier this month, IRDAI had released an exposure draft on revision in premium rates for third party motor insurance covers for 2017-18.
The regulator had proposed a steep 50 per cent hike in premium rates for third-party motor insurance from the coming fiscal year in certain categories. For instance, it has proposed a premium rate of Rs 3,355 for private cars exceeding 1,000 cc engine capacity but not exceeding 1,500 cc for 2017-18, from an existing rate of Rs 2,237. Similarly, the rates for private cars exceeding 1,500 cc engine capacity have been proposed at Rs 9,246 versus existing Rs 6,164.
No hike was proposed for cars below 1,000 cc and two-wheelers under 75 cc.
Third-party motor premium is the only segment in the general insurance still regulated. It is a mandatory cover vehicle owners need to purchase. It is an insurance against damage caused to a third-party in case of an accident.
