The Insurance Regulatory and Development Authority of India (IRDAI) has dropped proposal for mandatory disclosure of commissions on policy documents. The insurance regulator feels that disclosure of commission could discourage insurance agents, sources informed CNBC-TV18.
"The regulator also feels that insurance agents are important for insurance distribution. Moreover, mandating agents may impact business negatively," sources said.
As a result, agents will not be required to disclose commission earned on policy documents.
The proposal to mandate insurance agents to disclose commission on policy document also faced resistance from Life Insurance Corporation (LIC) and agents.
Earlier, IRDAI proposed a 20 percent cap on the agents’ commission for insurance companies. It also released a draft consultation paper on the commission limit.
In another development, the regulator has mandated dematerialisation of new insurance policies by December 2022. The insurance regulator has also asked insurance companies to dematerialise existing/old policies by December 2023.
Insurance policies could be dematrialised with National Securities Depository Limited (NSDL), Central Depository Services (CDSL) or Karvy.
Dematerialisation means converting physical policy document into a modifiable online object. It means that a person will no longer need to indulge in paperwork at time of renewing the policy. It is aimed at reducing transaction costs and also ensuring swift modifications in policies.