Life Insurance Companies: Life insurance companies may soon decide to impose a 30 percent commission cap on corporate agencies for credit life insurance policies. Credit life insurance is a type of policy designed to help with loan repayment in case of death of the insured before full repayment of the loan. According to reports, life insurance companies are close to forming a consensus on this matter for self-regulation amid concerns of GST evasion. According to media reports, life insurance companies are on the verge of reaching an agreement to impose a 30 per cent limit on the commission paid to corporate agencies, including banks and non-banking finance companies (NBFCs), for credit life policies. .
Where did the news come from
According to its sources, Economic Times has received news that in the last few months, there has been considerable discussion on this issue in the Life Insurance Council. Although no official letter has come from the council regarding this yet, but according to sources, the talks are at a very advanced stage through which things can be decided on the lines of self-regulation.
Why will this step be taken
This step is being taken because the insurance industry is trying to adjust to this by making some changes in its marketing practices. According to the report, insurance regulator IRDAI has decided to impose product wise cap instead of companies. This was done because the insurers were facing allegations of GST evasion.
IRDAI (Insurance Regulatory and Development Authority of India) is the regulatory authority for the insurance sector in India.
What’s the whole matter?
In March, IRDAI had implemented regulations related to payment of commission, which were brought in place of the traditional product specific commission, to put a cap or limit on the overall expenses of insurance companies. Under this, companies were instructed that the expenses of insurance operations should be covered under the overall expense limit of 30 percent. However, despite this, most of the insurance companies were adopting policies with 30-35 percent commission or higher premium so that their market share could be increased.
According to the report, it was found that some bank-insurer and NBFC-insurer partnerships are offering such policies in which the premium is directly increased from 5% to 35% to cover the same sum assured with housing of Rs 1 crore. Given.
What is Credit Life Insurance?
Credit Life Insurance is a type of policy designed to help with loan repayment in case of death of the insured before full repayment of the loan. However, IRDEO found that even though this policy is optional, its cost is added to the principal amount of the loan. If the customer opts for it, its premium has seen a significant increase.
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