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Irdai's commission cap move: General insurers get operational flexibility

Mid-to-smaller life companies and standalone health insurers could face near term pressure

IRDAI
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The regulator has proposed a 20 per cent commission cap on first-year premium (FYP) and 10 per cent of renewal premium (RP) compared to 35-40 per cent currently for FYP and 5-7.5 per cent for RP.

Subrata Panda Mumbai
The regulator’s move to cap commissions in the insurance sector is expected to provide operational flexibility to companies, especially general insurers, and promote greater discipline in the life insurance sector as the aim is to link commissions rate of intermediaries to the persistency status of the policies sold.

However, if they come into effect, the proposed regulations might impact standalone health insurers and mid-to-small life companies in the near term, but the large companies are unlikely to see any negative impact, analysts said.

The insurance regulator came out with an exposure draft this week, where it proposed to cap commissions paid by

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First Published: Aug 26 2022 | 6:15 AM IST

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