Page 12 - Insurance Times September 2015 SAMPLE

Insurance Regulatory & Development Authority
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IRDA dwindle distributors commissions
The Insurance regulator under the pro-
posed new rules has decided to reduce
the commissions that take a big bite
out of initial premiums, as much as 25-
30% of the first payments on
policies mostly without the
customer's knowledge.
A decades-old practice of big
commissions paid to distribu-
tors that have been weighing
down returns for policyhold-
ers, these mostly go under
the radar and are only dis-
covered, for instance, at the
time of early surrender of a policy, ex-
perts said.
The regulator has also proposed the
scrapping of upfront commissions that
some insurance companies pay to dis-
tributors such as banks, which could put policies excluding single premium poli-
a question mark on such tie-ups. A note
by the regulator Irdai announcing the
new rules are yet to be notified. The
move by the regulator will help reduce
mis-selling of policies.
Barrage of insurance rules to flood sector
The IRDAI is set to bring out a number
of new rules to conform to the New
Insurance Act which will be imple-
mented from as early as December
2015.
The Insurance Laws (Amendment) Act
2015 has made fundamental changes in
8 The Insurance Times, September 2015
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"This will bring in transparency and dis- violations
courage force selling of insurance prod-
ucts", said S. B. Mathur, former chair-
man of the state owned Life Insurance
Corp. of India (LIC).
IRDAI has proposed a policy
for the allocation of ex-
penses for various seg-
ments. It said that, no in-
surer should spend more
than an aggregate 10% of
all first year premiums and
4% of all renewal premium
on policies granting de-
ferred annuities for more than one
premium, 5% of premiums received
during the year on single premium an-
nuity products and 1/20th of 1% of the
average of the total sums assured by
cies.
The proposed rule changes may lead to
some immediate pain, but will have a
beneficial effect in the long term, said
an executive.
the way insurance is conceptualized,
sold and bought. It will bring out regu-
lations on claim rejection, expense
management, and solvency ratio too.
Adding further to the development,
three committees on life, non-life and
health have been constituted for
IRDAI penalizes Reliance
Life Insurance for norms
The Insurance Regulatory and Devel-
opment Author-
ity of India has
imposed Rs.85
lakh penalty on
Reliance Life Insurance Company Ltd.
for violation of norms pertaining to
outsourcing, among other violations.
An independent audit by chartered
account firm should be commissioned
to look into the entire transactions of
payments made to the service provid-
ers and the structure/shareholding
pattern/commission and the exist-
ence of all these entries, including the
relevance of payments made by Reli-
ance Money Infrastructure to various
entities, IRDAI said.
The company was asked to review
and examine the outsourcing policy
and related activities of the company
and initiate necessary steps to bring
about compliance in letter and spirit
to the regulatory provisions.
speedier execution and finalization of
new norms. These committees consist
of members from the insurance sector
to deliberate and come up with appro-
priate recommendations in their report
on these issues.
"Now that the regulatory body has all