Page 11 - Insurance Times January 2023

Insurers to get flexibility in
IRDAI steps to increase penetration to fasten growth
allocating commissions Recent measures announced by IRDAI)have the potential to fasten the new
IRDAI said that removal of cap on com- business growth for companies and deepen insurance penetration in India,
mission of insurance intermediaries like Washington based international actuarial and consulting Milliman said.
agents and brokers will make insurance
India's new business premium growth has been in double digits for the better
policies more affordable for people.
part of the last decade and IRDAI's easing of guidelines could extend the run,
Further, the insurance regulator said the consultancy said without quantifying the extent of faster growth.
that the move will give more flexibility
Last month, the regulator announced a slew of changes in products, distribu-
to insurers to incentivize efforts of their
tion and capital requirements, giving insurance companies the option to make
agents and intermediaries.
their own choices, many of which required regulatory approvals before.
IRDAI said, "For commissions, the maxi-
mum limits as specified in the current
money back and endowment policies, tinuous exercise to ensure that it is in
regulations are proposed to be removed
insurers can charge expenses of up to sync with the emerging trends and dy-
with commissions being linked to the
80% in first year and 17.5% during re- namics of market and serves the in-
overall limit of expense of manage-
newals. tended objective of 'Insurance for All'."
ment. This will enable insurers to de-
vise commission structures incentivizing For single premium policies and annuity
the intermediaries in line with their so- products, life insurers can charge up to IRDAI moots long-term
licitation efforts and also making insur- 5% of the total premium with additional
Motor 3rd party, fire cover
expenses based on a few criteria like al-
ance more affordable."
IRDAI is planning to allow all general
lowance for head office expenses and
Recently, IRDAI has issued a draft insurers to offer long-term motor prod-
insurtech and insurance awareness.
guideline on payment of commission in ucts covering both mandatory motor
Similarly, general insurers can charge
which it has done away with the cap on third-party and own-damage cover.
up to 30% of the annual premium and
payment of commission. However, it has
standalone health insurers can charge To allow the policyholders a wider
advised insurance companies to pay
up to 35% of the annual premium with choice, the regulator has proposed to
commission within the expense of man-
additional expenses subject to fulfilment permit a three-year motor insurance for
agement.
of certain conditions. private cars and five-year cover in the
According to IRDAI's proposals, insur- case of two-wheelers coterminous with
Further IRDAI said, "IRDAI's mission of
ers can charge up 100% of the annual motor third-party liability cover.
protection of policyholders' interest and
premium in the first year on term poli-
orderly growth of the insurance sector It has also been proposed to allow long-
cies with premium payment term of
is always a priority. Efforts are made to term own damage cover, in the case of
over 10 years. The expense on renewal
reach the last mile by strengthening the renewal of standalone own damage
premiums can go up to 25%.
entire ecosystem. A periodic review of policies and a three-year cover for mis-
For traditional policies like whole life, the regulatory framework will be a con- cellaneous and special types of vehicles
10 January 2023 The Insurance Times