The Insurance Regulatory and Development Authority of India (IRDAI) has expressed concern over the high commission and distribution costs in the insurance sector during a meeting with insurance company CEOs, according to sources cited by CNBC-TV18.
The regulator has told insurers that these costs need to come down in order to improve efficiency and ensure greater value for policyholders.
In response, insurers have suggested a proposal to cap commissions on the lines of the mutual fund industry’s Total Expense Ratio (TER) model. According to sources, a detailed presentation on adopting such a model is likely to be submitted to IRDAI soon.
Further, insurers have also proposed greater transparency measures, including disclosing commission details in the policy document provided to policyholders.
The development comes amid heightened regulatory scrutiny to bring down overall expenses in insurance products and align practices closer to global standards.
