Insurance commission sub-limits to be removed: IRDAI chairman

Regulator to define control in corporate governance guidelines

The Insurance Regulatory and Development Authority of India (Irdai) plans to remove the cap on agent commission within the overall expense margin allowed in insurance products, according to Irdai chairman T S Vijayan.

Irdai would make changes in the guidelines on expense management, Vijayan said. “Instead of looking at commission on a stand-alone basis, we are looking at the cap on expenses.”

On foreign direct investment hike in companies, he said: “If the Foreign Investment Promotion Board clears it and if the joint venture gives control to the Indian partner, we’ll give approval within a week.”

He was speaking to reporters on the sidelines of the annual insurance summit organised by the Confederation of Indian Industry here on Friday.

He said Irdai would ensure Indian management control in insurance companies. The management must be fully board-run with the majority representing Indian investors, he added.

There has been some apprehension among foreign promoters on the control of Indian ventures when their stake is increased. Vijayan said that by December this year, Irdai will give some clarity on the subject through corporate governance guidelines.

After the Insurance Act has been passed and foreign reinsurers have been allowed to set up branches in India, Vijayan said seven to eight reinsurers have expressed interest to do so.

On specialist insurance market Lloyd’s, he said appropriate regulations for it to operate in India would be brought out.

On architecture for corporate agents (including banks), Vijayan said it would not be mandatory to tie up with more than one insurer in the initial stages. “We are committed to an open architecture and we will ask these companies on what their roadmap for open architecture is.”

There are also talks of making it mandatory for insurers to list on the stock exchanges. Vijayan hinted it is too early for it to be implemented.

On building growth and value, Vijayan said there needs to be simple and appropriate schemes such as the Pradhan Mantri Jan Suraksha schemes that have covered several million people within a few months of launch. “The insurance schemes launched by the Prime Minister created the kind of growth in months what has taken the insurance industry years. There is a hint in it as to what the industry needs to do to create growth and appropriate value.”

He emphasised on the need to have easy-to-understand products and an easy claim filing and settlement process, which he said was more important than having ‘innovative’ products in the market.