Commission of insurance workers likely to be regulated in March

Insurance Regulatory and Development Authority, the insurance regulator of the country, said today that the final regulations for commission of insurance brokers will most likely be released by next month.

"A sub-committee has been formed which will decide on the quantum of cap on commission... though the cap on commission and other remunerations for insurance brokers cannot be removed," said IRDAI Chairman T S Vijayan.

"...discussion is a continuous process... sub-committee is discussing all this. I hope to bring the final regulation by March," he said on being asked if IRDAI was ready to discuss the quantum of cap with the brokers.

Vijayan was in Hyderabad to release the report 'Vision 2025: Broker-Driving customer centric growth' at the 12th annual summit of Insurance Brokers' Association of India (IBAI). The report was published in association with Ernst & Young.

"We have requested that lthe market forces decide what should be the remuneration depending on the value each market participant is adding," said IBAI president Sanjay Kedia.

As per the estimates of the report, the broking channel had the potential to contribute 40% of the gross direct premium in the non-life insurance business and 1.6% of the new business premium in the life insurance business in the coming years.

"The brokers share of the total non-life insurance market is 27 per cent at around Rs 20,000 crore and is expected go to Rs 1,60,000 crore," Kedia added.

As per the report, the total premium was Rs 83,048 crore in the non-life segment in FY15, and if progressive actions are taken, this is likely to rise to Rs 4,00,000 crore in FY25.

Similarly, for the life insurance segment, a new business premium at Rs 1,13,327 crore in FY15 can rise to Rs 4,60,000 crore in the coming ten years. The non-life insurance segment will grow at 13 to 17% CAGR in the next 10 years, while the life insurance market will increase 11 to 15% in the same period.

"…the need of the hour is to keep pace with the changing times, environment, economy and tune the responses to the best of the people, society and everyone else," Vijayan added.

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