IRDAI's Exposure Drafts On Commission And EOM

Introduction

Insurance business in India has historically been subject to several restrictions in terms of the amounts Insurance Companies are permitted to spend on certain activities, including commission/remuneration and rewards to insurance agents and insurance intermediaries as well as other marketing expenditure. In this regard, the Insurance Act read with the regulations emanating from these provisions have historically capped the commission/remuneration and rewards payable to insurance agents and insurance intermediaries for the solicitation and procurement of insurance business as well as the permissible expenses of management of the Insurer ("EOM").

Following a recent series of regulatory reforms focussed on increasing insurance penetration and improving efficiencies in business operations in the insurance sector and after several months of press reports foreshadowing the same, on 23 August 2022 the IRDAI proposed reforms on commission structures,