Insurance Regulatory and Development Authority (Irda) chairman T S Vijayan is slated to meet members of Parliamentary panel on Insurance Law (Amendment) Bill here on Monday, said a source.
The Bill is likely to be tabled in the winter session.
The regulator is likely to suggest that the agent licensing process, which is currently handled by Irda, be handed over to insurers. Currently, after training and examination, the Irda grants licence to an agent.
Also, the regulator wants the new law to let insurers fix the agency commission on their own. Currently, the law does not allow an insurer to pay more than 40 per cent of the first-year premium to the agents as commission.
Sources said the regulator is of the view that a flexible commission framework will make agents more productive and help deepen insurance penetration, which is only 3.2 per cent now.
There were 21.5 lakh life insurance agents at the end of the September quarter. In FY11, there were 26 lakh, which has been steadily declining ever since the commission was capped at 40 per cent. Since the beginning of this fiscal alone, there was a decline of 40,000 agents from 21.9 lakh at the end of the last fiscal.
The decline started after Sebi banned life insurers from selling unit-linked insurance products in June 2010.
The insurance industry has been demanding hiking agency fees for long as it would help them organise their agency force better.
"Agents are responsible for bringing in over 90 per cent of business to the life insurance industry. But they do not find their job attractive now with the 40 per cent of first year premium as their commission," Life Insurance Council secretary general V Manickam said.
"Hence, the industry has been demanding that the provisions governing licensing and commission in the Act must be transferred to Irda so that the regulator has the flexibility to allow insurers to fix remuneration to their agents of their own," he added.
Since an agent can sell policies of only one company that one is associated with, there is no sense in not allowing an insurance company to issue licence to them, he added.
The source said all the three Irda members and few other senior officials will be present during the interaction with the MP. The meeting is likely to be attended by the house panel chairman and BJP MP Chandan Mitra.