Business
Insurance brokers oppose IRDAI caps across 30 commission bands
The Indian Express··1 Oct
Insurance brokers opposed IRDAI reforms citing over 30 commission caps and a one-third cut in expense limits. IBAI said 69 percent of complaints against general insurers relate to claims, and 63 percent are decided in customers' favour. As of March 31, 2025, brokers sponsored 14.81 lakh of India's 27.18 lakh point-of-sale persons. IBAI plans a detailed response by October 25.
Prism
What It Means For You
- Brokers argue lower commissions could thin sales and claims staff who help policyholders.
- IBAI supports bans on compulsory insurance bundling with loans and clawbacks for proven mis-selling.
- Proposed expense-limit cuts of more than 30 percent over five years are part of the dispute.
What's Happening
- The consultation paper is titled Reforms for Recalibrating Economics of Insurance Distribution.
- IBAI said general insurers' expenses of management fell from 28.2 percent of premium in 2022-23 to 26.5 percent in 2024-25.
- It urged retention of the 2023 expense-management framework until the scheduled 2028 review.
What Brokers Do
- Brokers are legally required to act in the customer's interest, unlike tied agents, IBAI said.
- They compare policies, negotiate coverage and help with claims.
- IBAI said many point-of-sale persons operate in Tier-2 and Tier-3 towns.
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