“It has come to the notice of the Authority that concerns are being expressed in some quarters regarding mandatory disclosure of commissions on the policy documents. The concerns emanate from certain recommendations made by Working Groups constituted by the Insurance Councils. It is hereby clarified that the Authority has not taken any decision on this matter. Furthermore, the Authority will hold extensive consultations with all stakeholders before any such decision is taken,,’’ said IRDA on Friday.
Hyderabad:
The insurance regulator IRDAI has clarified that it has not taken any decision on regarding mandatory disclosure of commissions on the policy documents.
“It has come to the notice of the Authority that concerns are being expressed in some quarters regarding mandatory disclosure of commissions on the policy documents. The concerns emanate from certain recommendations made by Working Groups constituted by the Insurance Councils. It is hereby clarified that the Authority has not taken any decision on this matter. Furthermore, the Authority will hold extensive consultations with all stakeholders before any such decision is taken,,’’ said IRDA on Friday.
Earlier, in a bid to transform insurance solutions from “push products ” into “pull products”, by bringing in further transparency of product costs and streamlining expenses of management (EoM) for the insurers, it is believed that the IRDAI as part of new measures would ask the insurers them to mention the exact amount of commission, that are being paid to an intermediary for each cover, on the policy documents.
The idea behind mentioning the commission cost, which is regulated by the IRDAI, on the policy document, will help a customer, both retail and corporate, to be aware of the exact cost of insurance covers and judicious decision making processes.
However, the move has been staunchly opposed by the insurance agency force on various grounds.
Earlier, Rakesh Joshi, member (Finance and Investment), IRDAI, had met chief finance officers(CFOs) of life and non-life companies in Mumbai separately last month, to discuss various issues relating to the management expenses.
After patiently hearing the CFOs of some prominent insurance companies for couple of hours, who wanted a higher EoM limit, Joshi outlined IRDA’s agenda saying that the regulator was in favour of laying out a clear cut road map on EoM so that the existing costs of the products to fall significantly and the insurance gradually should be seen as a more pull product rather than push product.
`IRDAI wants insurance penetration to rise and ultimately achieve a fully insured country in a matter two decades. This won’t happen unless costs of covers fall. The Indian mutual fund industry today successfully has made its products a pull product by cutting down its expenses to 0.85 per cent. Now, it is the turn of the insurance industry to replicate this,’’ said Joshi.