The request included details on channel-specific payouts: agency, bancassurance, brokers and direct segments apart from product specific commission structures, they said.
Niraj Shah, executive director and chief financial officer (CFO), HDFC Life Insurance, said that Irdai had sought data on the cost of acquisition, which the company has provided. “They (Irdai) do keep seeking data from time to time on various matters, this is one of such matters as well," he said. "They have sought data and we have provided as required, as everyone would have. It is more in terms of already available (information) in some sense in the public disclosure in terms of the cost of acquisition. So it is just the regulator seeking more information on the same lines.”
Life insurance companies have been sharing data on commissions to the regulator amidst the wider discussion on the review of the distribution models and concerns about high commissions on certain channels of distribution. However, the companies have not received any updates after sharing the data with the regulator.
“We do acknowledge that the regulator has asked for data which we have provided but we have not heard anything beyond that,” ICICI Prudential Life Insurance's management said in its post-earnings analyst call.
In his first public address, Irdai Chairman Ajay Seth had flagged the issue of high distributor commissions. Seth had said: “The matter that requires the closest attention is distribution. We have to go from a high-cost structure to a moderate-cost structure while maintaining good service. In life insurance, 20 per cent of the risk pool is the cost of procuring and managing it, and a significant part of that is not actually the risk pool — it includes a lot of savings."
"For context, any financial sector that has a cost of savings sees the risk pool at 20 per cent. For non-life insurance, it is 30 per cent," he pointed out. "Commissions to corporate agents vary widely: the largest life insurer after Life Insurance Corporation of India spends 4 per cent of its premiums on them, while the second largest spends 17 per cent, even though both get 50 per cent of their business from this channel.”
The Reserve Bank of India (RBI) had also flagged that high distribution costs are restricting the expansion of insurance coverage, as they are embedded in pricing, which reduces affordability and leads to divergence between insurance density and penetration. It also noted that the conservative investment strategy of the insurance industry has potentially reduced the attractiveness of long-term insurance savings products among consumers.
 "Insurance Policy")