The policyholders will bargain hard with agents to part with their due earnings without considering any kind of administration, technology development and other recurring and daily growing expenses including the sky-high rentals and salaries which would soon and definitely have ripple-effects on policy-holders as well, said Naveen Goel, president, IAWA, in a letter addressed to Debasish Panda, chairman, IRDAI
New Delhi:
Insurance Agents Welfare Association(IAWA), representing 10 lakh insurance agents in the country, has urged the insurance regulator IRDAI to refrain from displaying the commission paid to the agents on the face of every policy.
“It is a matter of great concern that the General & Life Insurance Councils’ have recommended displaying the commission paid to the agents on the face of every policy. This is quite a surprising and shocking recommendation- when margins of sellers, service-providers, suppliers, manufacturers or any such vendors are not printed on any goods and services, then why should commission be printed on insurance policies? It does not even fall in line with the global standards. To the best our knowledge, it’s even against the guidelines set by Ministry of Finance- “Financial transaction / commission between any two or more entities should not be displayed to public at large,” said Naveen Goel, president, IAWA, in a letter addressed to Debasish Panda, chairman, IRDAI.
As policy-holders will have a clear picture of agents’ commission per policy, they will overlook all kind of expenses which any agent incurs to get trained and update knowledge to procure and service any kind of insurance policy. Rather, the policyholders will bargain hard with agents to part with their due earnings (that too without considering any kind of administration, technology development and other recurring and daily growing expenses including the sky-high rentals and salaries) which would soon and definitely have ripple-effects on policy-holders as well ,’’explained Goel.
Reduction in agents’ earnings would affect their livelihood which will result in hampering their growth in terms of knowledge update, policy-servicing capabilities, business volume, technology, risk management, cautioned Goel.
An agent/Intermediary contributes substantially in country’s economy and on average has a strength of 5-7 team members and when such agents would be unable to earn and survive, how can anyone expect them to retain those team members, Goel questioned.
Agents/Intermediaries are the backbone of insurance industry, who for decades have helped to increase insurance penetration in best possible manner and have always worked and will keep working in the interest of policy-holders, said Goel.
Further, the guidelines, practices and logistics of mutual fund industry should not be implemented for the insurance industry , as both have different set of challenges, approach, advantages and disadvantages, he stated.