Following the move by the Insurance Regulatory & Development Authority (Irda) asking the life insurers to reveal the commissions they are paying to the intermediaries like agents and brokers for selling Ulips, life insurers apprehend that it would rise to rebate culture where a prospective customer would force the agents to share the commission with him.
Insurers said that they are paying a commission between 2% to 14% to the agents for selling unit-linked insurance plans (Ulips). The insurers are yet to see any negative impacts of Sebi-Irda spat (over the issue of regulatory jurisdiction of Ulips) on their performance.
DK Mehrotra, managing director of LIC, said, ?The Irda move may give rise to an unhealthy situation where the customer would ask the intermediary to share his commission with him (customer). An intermediary gets his commission to provide service through out the tenure of the policy and if forced to share his commission may lose motivation for providing this required service.??
That too if the policy holder redeems his Ulip to cash on the gain, the intermediary stops receiving renewal commission. GV Nageshwara Rao, MD & CEO, IDBI Fortis , said the commission paid by the company to the agents vary.
?While we pay 2% of premium to them in case of single premium payment, for regular premium payment, the commission is in the range of 6-12%. There is apprehension among the agents that the policyholders may ask them to pay them whatever amount they get in form of commission,? he said.
