Remuneration And Rewards: Myths vs. Reality

Limits on remuneration/rewards to intermediaries has been an area which is highly controversial and keenly debated, following the changes introduced by the Insurance Laws (Amendment) Act, 2015. The statutory caps on remuneration as contained in Sections 40 and 40A of the Insurance Act, 1938 ("Act") were deleted and simultaneously, amendments were introduced in Sections 31B and 40 to provide that no insurer shall pay any amounts (including rewards) to insurance agents and insurance intermediaries for solicitation of business other than as specified in regulations notified by the IRDAI. Section 114A(2)(ic) and 114A(2)(jd) of the Act empowers the IRDAI to specify the limits on remuneration (whether payable by way of commission or otherwise) and the manner and amount of remuneration and rewards payable to insurance agents and intermediaries by way of regulations.