Insurance sector regulator Irda (Insurance Regulatory and Development Authority) suggested to the parliamentary panel looking into the Insurance Bill on Monday, to incorporate a provision to give a free hand to insurers to fix the agency commission, which is currently capped at 40 per cent of the first-year premium.
At a meeting held with MPs chairing the select house panel on the Insurance Law (Amendment) Bill on Monday, Irda Chairman T S Vijayan endorsed the regulator's internal panel's recommendation to abdicate its powers to fix agency commission, because it felt that insurers should be free to give agents better commissions to help deepen insurance penetration, said an Irda member who attended the meeting. The meeting was chaired by BJP member Chandan Mitra, who is the chairman of the select house panel, in Mumbai on Monday. The house panel is likely to submit its report before the winter session which begins on November 24 and the finance ministry is hopeful tabling the Bill during the session.
The government had tried to table the Bill in the monsoon and budget sessions in June and July, but could not do to due to opposition from the Congress. Currently, the law does not allow insurers to pay more than 40 per cent of the first-year premium to agents as commission. Sources said that the Irda is of the view that a flexible commission framework would make agents more productive and help deepen insurance penetration, which is only 3.2 per cent at present. Agents have been quitting insurance companies due to a lack of major incentive to them and their number shrank to 21.5 lakh as on September 30 from 21.9 lakh as on 31 March this year, as per industry sources.
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