While the Insurance Regulatory and Development Authority of India (Irda) has come out with a roadmap on detariffing, there is still a lot of ambiguity about the remuneration that a direct general insurance broker will get in the detariffed era. | |
| In the current scenario, a broker can get a remuneration of up to 12.5 per cent (paid-up capital of the customer up to Rs 15 crore), 7.5 per cent (paid-up capital between Rs 15 crore and Rs 25 crore) and 6.25 per cent (paid-up capital above Rs 25 crore) on final premium in tariff business. |
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| For motor tariff and other statutory insurance like public liability insurance, the compensation is limited to 10 per cent. On non-tariff products, the broker can get a compensation of up to 17.5 per cent. |
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| With detariffing scheduled from 2007, the percentages with regard to tariff business are expected to cease to exist. Irda, however, has not given any guidelines in this regard. |
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| Confirming this issue, C S Rao, chairman of Irda, told Business Standard, "Broker's remuneration in a detariffed era is something that we are yet to decide on. We, therefore, cannot confirm that there will be a flat upper limit of 17.5 per cent for general insurance brokers in a detariffed era." |
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| Brokers are, therefore, left with speculating on the upper limit for their compensation in a detariffed era. |
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| According to Ramana Reddy C V, managing director of a Hyderabad-based broking entity, "There is likely to be a single upper limit of 17.5 per cent in a detariffed era." L Raveendran, a Chennai-based broker says that though there is likely to be an upper limit of 17.5 per cent, the actual compensation may turn out to be significantly less unless the brokers retain their business through value-added services. |
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