IRDAI’s proposal will apply to the gross premium of general and standalone health insurance companies. The insurance regulator has also set a limit of 30 per cent for Expense of Management (EoM)
A limit of 20 percent can be fixed for the commission of agents of insurance companies. Insurance regulator IRDAI has presented this proposal. In this regard, the regulator has issued a draft consultation paper.
If this proposal of the insurance regulator is implemented, then insurance companies will have to make a policy for the commission of agents. This policy will have to be approved by the board of the company.
IRDAI’s proposal will apply to the gross premium of general and standalone health insurance companies. The insurance regulator has also set a limit of 30 per cent for Expense of Management (EoM). This will be 30 per cent of the gross premium of general and standalone health insurance companies.
The insurance regulator has sought people’s suggestions on this proposal. It has issued a notification in this regard. It says, “Suggestions or comments on the proposed draft regulations can be sent by September 14.” It can be sent to sumandeep.ghosh@irdai.gov.in. A copy of this will also have to be sent to uma@irdai.gov.in.
IRDAI said in the notification, “This step has been taken to promote new business, models, products, strategies and internal processes in insurance companies. This will help insurance companies to manage their expenses easily.”
Last month, the insurance regulator had also issued a consultation paper on management expenses. Apart from curbing expenses, it also includes a proposal to limit the variable pay of CEO/MD, whole-time director and key management personnel.
According to this draft, in case of a new company, the limit for management expenses will be 30 percent for the first 10 years or till the company’s market share reaches at least 1.5 percent in a financial year.
The insurance regulator had received requests for reviewing the existing rules. Keeping this in mind, the existing rules have been reviewed.