The recent move to abolish the commission cap by the insurance regulator has intensified competition among insurers, particularly unlisted players keen to wrest market share. Many banks are being offered double the commission as legal caps on commission payments have been lifted, said several insurance executives.
Before this change, insurance companies were bound by a cap on commissions, with a limit of 35% and another 35% on the OverRide Commission (ORC). This had led to many queries revolving around ORCs and compliance with Goods and Services Tax (GST) norms.
The Indian insurance regulator’s decision to abolish commission caps has led to increased competition among insurers to attract market share, particularly unlisted players who are offering higher commissions to bank. While it is hoped that there will be more transparency in payouts to distributors, it is unclear whether insurers will alter payouts significantly in pursuit of rapid growth or stick to profitability.
