The Insurance Regulatory and Development Authority of India is cracking the whip on misselling of insurance by banks. It proposes to ban insurance companies from giving incentives and junkets to bank staff for selling insurance policies.
The regulator will come out with a differential commission structure for agency and banks. This could shave off incentives for bankers selling insurance. “We’re going to prescribe differential commission for agency and bancassurance,” said Nilesh Sathe, member-life at IRDAI.
“We are going to allow 35 per cent commission and 7 per cent incentives for agency. For banks, we would allow 35 per cent commission but no incentives. The commission is spread over the term depending on the nature and tenor of products.”
In the exposure draft, the regulator had suggested legalising overriding commission to be paid to individual agents. Insurance companies have been paying productivity-related bonus to performing individual and corporate agents. “We have to compensate agents for their efforts,” said Sathe.