Insurance brokers oppose Irdai’s proposed reforms, warn of job losses | Insurance News
Indian insurance brokers are opposing reform proposals from the country’s regulator, including caps on commissions paid to banks, brokers, and agents, according to letters from the Insurance Brokers Association of India (IBAI) to the finance minister and prime minister, seen by Reuters.
The Insurance Regulatory and Development Authority of India proposed the rules as part of a discussion paper in late September and invited stakeholders to submit feedback by October 25.
The regulator’s proposed rules include linking commission levels to the complexity of products and effort required to sell, with mandatory insurance covers such as third-party motor policies earning little or no commission.
The reforms are aimed at reducing insurance costs for policyholders.
However, the association said the proposed rules would shift money away from distributors and insurers’ own employees to insurance company owners, without requiring any savings to be passed on to policyholders.
The IBAI says in its letters that the new regulation may put at risk at least 1 million jobs over a five-year period, before counting salaried staff of insurers.
It also argues that the reforms may lead to a resurgence of unethical practices, such as insurers disguising excess commissions as “marketing fees.”
A complete overhaul of distribution within months of allowing 100% foreign direct investment would signal high regulatory uncertainty, IBAI added.
It urged the regulatory body to not enact hard caps on commissions without “published impact assessment covering policyholders, employment, public sector insurers and foreign investment”.
The IBAI has requested an audience with the finance minister and prime minister, asking that the current framework run till its scheduled 2028 review.
