Stories
Insurance Buyers Demand Commission Caps, Upfront Disclosure: Survey Reveals Strong Support
- •A LocalCircles survey found that 7 in 10 insurance buyers support commission caps for agents and distributors, while 8 in 10 want upfront disclosure of commissions before policy purchase.
- •The findings align with IRDAI's recent consultation paper proposing changes to insurance distribution, including commission limits and measures to address mis-selling.
- •86% of respondents reported not being informed about the commission their agent or distributor would receive from the insurer prior to buying a policy.
- •The survey also highlighted concerns about policy recommendations, with half of respondents stating agents frequently recommended policies without clear explanations of suitability.
- •71% of respondents supported limiting distributor commissions if it leads to reduced insurance premiums, indicating a strong consumer desire for cost savings and transparency.
Key Questions Answered
According to a LocalCircles survey released on Friday, September 25, 7 in 10 (70%) insurance buyers support limiting commissions paid to agents and distributors, while 82% want insurers to disclose the payable commission before a policy is purchased.
The IRDAI proposed product- and channel-specific commission caps varying by insurance segment, along with lower Expenses of Management (EoM) limits. Life insurers must reduce company-level EoM to 15% of gross direct premium income within two years and 12.5% within five years, while general insurers' EoM limit will be reduced from 30% to 20% over five years.
The regulator has invited comments from stakeholders and the general public regarding the proposed changes to insurance distribution until October 25.
