“It is primarily, I think, to consumer interest, to reduce costs and also at the same time to prevent mis-selling,” said RBI Governor Sanjay Malhotra .
Mumbai: RBI Governor Sanjay Malhotra has backed the Insurance Regulatory and Development Authority of India’s (IRDAI) proposed distribution reforms, saying the regulator’s focus on reducing costs and curbing mis-selling is in the interests of both consumers and the insurance industry.
Commenting on the sweeping changes proposed by the IRDAI to recalibrate the economics of insurance distribution, during the customary media interaction following Wednesday’s announcement of the bi-monthly monetary policy, Malhotra said the regulator had put forward draft proposals and would consider feedback from all stakeholders before finalising the framework.
“The regulator obviously has put on certain drafts, so they will take comments from all stakeholders, including the industry and consumer groups,” Malhotra said.
He said the proposed reforms were primarily aimed at protecting consumer interests while bringing down the cost of insurance distribution.
“It is primarily, I think, to consumer interest, to reduce costs and also at the same time to prevent mis-selling,” he said.
The IRDAI consultation paper on recalibrating the economics of insurance distribution has proposed a significant overhaul of the existing expense and commission framework. The regulator has suggested tighter limits on distribution costs, greater transparency in remuneration and safeguards against practices that could encourage mis-selling.