The IRDAI is removing caps on commission payments, now prescribed by branch of business, putting commissions instead under an overall cap on expenses of management (EoM) of insurers.
According to a notification issued on 28 March 2023 by the IRDAI, the changes will be implemented with effect from 1 April 2023.
The changes will allow insurers more flexibility in deciding on commissions payable under various covers as long as the quantum of commissions is kept within the overall EOM limits.
The change is welcomed by insurers. Mr Tapan Singhel, MD & CEO of Bajaj Allianz General Insurance, told Times of India,“We firmly believe that the shift from product level commissions to a company-wide limit of expenses, as proposed by the proposed regulation, will ensure parity across varying business models while rendering greater flexibility in managing expenses for insurers.”
Shriram General Insurance MD & CEO Anil Kumar Aggarwal says that the change in the commission system will facilitate product innovation, help the development of new product distribution models and lead to more customer-centric operations.
