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Caps on commission and other remunerations for insurance brokers cannot be removed, according to TS Vijayan, Chairman, Insurance Regulatory and Development Authority of India.
Speaking at the 12th insurance brokers’ summit here on Wednesday, Vijayan said, “There has to be a regulatory limit for the public good.”
However, the regulator is ready to discuss the quantum of cap, in light of the draft regulations released recently. The draft regulations allow commission up to about 15 per cent, which varies from segment to segment.
The authority had also constituted a sub-committee to look into various aspects. The final regulation will be out by March this year. Adapting to the requirements of financial intermediation in the digital era will be a challenge for the broking community, Vijayan said.
Call for liberalisation Speaking earlier, Sanjay Kedia, President of the Insurance Brokers Association of India (IBAI), said IRDAI should liberalise commissions to allow market forces to determine them. He also urged the regulator to be considerate in imposing penalties. “For small lapses, licences are being cancelled. While we always seek to abide by rules, cancellation of licenses should be done only in the rarest of rare cases,” he said, adding that penalty structure should also be in line with the quantum of business of a broker.
The IBAI released a report, ‘Vision 2025: Brokers Driving Customer-Centric Growth’ on the occasion. According to the report, the broking channel had the potential to contribute almost 40 per cent of the gross direct premium in the non-life insurance business, and 1.6 per cent of the new business premium in the life insurance business, in the coming years.
The brokers’ share of the total non-life insurance market is rapidly growing and is already at about 27 per cent of the total market.
In 2014-15, the total premium was ₹83,048 crore in the non-life segment, which is projected to touch ₹4 lakh crore by 2025.
Similarly, new business premium in the life insurance segment, which was at ₹1,13,327 crore in 2014-15, is expected to increase to ₹4.60 lakh crore by 2025, the study said.
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