The proposal to disclose agents’ commission in policy documents was opposed by Life Insurance Corporation of India (LIC) and agents
The insurance regulator has already set a deadline of December 2022 for dematerialisation of new insurance policies. This means that by the end of this year, all new policies will have to be issued in electronic form.
It will no longer be mandatory to mention the commission received by agents in insurance policy documents. IRDAI has withdrawn this proposal. The insurance regulator believes that including commission information in the documents may discourage insurance agents. Sources have given this information to CNBC-TV18.
Sources said, “The regulator also believes that insurance agents are important for the distribution of insurance. Apart from this, the rule of commission disclosure can have a negative impact on the business.” After this decision of IRDAI, it is not necessary for agents to disclose commission in the documents.
The proposal to disclose commission in policy documents was opposed by Life Insurance Corporation of India (LIC) and agents. Earlier, IRDAI had also proposed to limit the commission of insurance companies’ agents to 20 percent. It has also issued a draft consultation paper on the limit of commission.
The insurance regulator has already set a deadline of December 2022 for the dematerialisation of new insurance policies. This means that all new policies will have to be issued in electronic form by the end of this year. IRDAI has also made it mandatory for insurance companies to convert old insurance policies into electronic form by December 2023.
Insurance policies can be dematerialized with NSDL, CDSL or Karvy. In dematerialization, the physical policy document is converted into an online object.
This means that the policyholder will not need any paperwork while renewing the policy. Dematerialization of insurance policies will reduce transaction costs. Also, any kind of modification in the policy can be done easily.