IRDAI’s proposed distribution norms ruffle feathers of LIC agents, broker body
Insurance agents and broker bodies are opposing proposed IRDAI reforms regarding commission structures and distribution norms. They argue that these changes could threaten the livelihoods of agents and reduce insurance penetration in India.
Why it matters
The debate highlights the tension between regulatory efforts to lower costs for consumers and the economic stability of the insurance agency workforce.
Voicing concerns over the impact of the reforms IRDAI is proposing to norms governing distribution, commissions and expenses, bodies representing insurance brokers and Life Insurance Corporation of India (LIC) agents have urged the insurance regulator to consider the likely repercussions on the jobs and livelihoods.
Cost efficiency should not be pursued in a manner that reduces the number of active agents or makes the profession economically unsustainable. The primary objective of distribution reform should ultimately be to increase insurance coverage and improve policyholder outcomes, said the Life Insurance Agents’ Federation of India (LIAFI) in its responses to IRDAI.
Any substantial reduction in the earnings potential of agents could discourage new entrants and adversely affect the existing agency force, Secretary General B. Markandeyulu said.
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