Agent pay on ULIPs may be cut

The life insurance industry, riding high on the back of brisk sales of unit-linked insurance plans (ULIPs), is in for a rude shock.

The Insurance Regulatory and Development Authority (IRDA) is considering reducing the cap on commission payable to agents for selling ULIPs, to end customers being short-changed through the improper selling of these insurance plans.

In a lecture tonight, IRDA Chairman C S Rao said: "The IRDA wants policyholders to make informed decisions on unit-linked life insurance products. Our concerns are because of issues relating to risks they bear; ambiguity in respect of the naming of charges; the charges levied and their periodicity; and the disclosures on performance."

Life insurers pay up to 35 per cent commission on ULIPs against 20 per cent on traditional policies in the first year.