Insurance Regulatory and Development
Authority of India (Payment of Commission or Remuneraton or Reward to Insurance
Agents and Insurance Intermediaries) Regulations, 2016
Insurance Regulatory and
Development Authority of India (Payment of Commission or Remuneraton or Reward
to Insurance Agents and Insurance Intermediaries) Regulations, 2016
[29th
June, 2020]
In exercise of the powers
conferred by clause (ic) and (jd) of sub-section 2 of Section 114-A read with
Section 31-B of the Insurance Act, 1938 (4 of 1938), and read with sub-section
(1) of Sections 14 and 26 of the Insurance Regulatory and Development Authority
Act, 1999 (41 of 1999), the Authority in consultation with the Insurance
Advisory Committee, hereby makes the following regulations, namely:—
Regulation - 1. Short Title and Commencement of the Regulations.
(a) These Regulations may be
called the Insurance Regulatory and Development Authority of India
(Payment of commission or remuneration or reward to insurance agents and
insurance intermediaries) Regulations, 2016.
(b) They shall come into force
on 1st April, 2017.
Regulation - 2. Definitions.
(a) “Act” means the Insurance
Act, 1938 (4 of 1938), as amended from time to time.
(b) “Authority” means the
Insurance Regulatory and Development Authority of India established under the
provisions of Section 3 of the Insurance Regulatory and Development Authority
Act, 1999 (41 of 1999).
(c) “Commission” means the
compensation paid to and received by an insurance agent from an insurer for
soliciting and procuring an insurance policy.
(d) “Insurance Intermediary” is
as defined in Section 2(1)(f) of the IRDA Act, 1999 and for the purpose of this
regulation includes
(1) Corporate Agents
(2) Insurance Brokers
(3) Web Aggregators
(4) Insurance Marketing Firm
[4-A. Common Public Service
Centre-SPV]
(5) Any other entity as may be
notified by the Authority from time to time.
(e) “Remuneration” means the
compensation paid by an insurer and received by an insurance intermediary for
soliciting and procuring an insurance policy.
(f) “Reward” means the amounts
paid, whether directly or indirectly, as an incentive by whatever name called
by an insurer to:
(i)
an
insurance agent towards benefits such as gratuity, term insurance cover,
various group insurance covers, telephone charges, office allowance, sales promotion
gift items, competition prizes and such other items.
(ii)
an
insurance intermediary towards services such as risk analysis, gap analysis,
plan design, predictive modeling, data management, infrastructure,
advertisement and such other items including any additional incentives by
whatever name called.
(g) Words and expressions used
and not defined in these Regulations but defined in the Act, as amended from
time to time, the Insurance Regulatory and Development Authority Act, 1999 or
in any of the Regulations/Guidelines made there under shall have the meanings
respectively assigned to them in those Acts/Regulations/Guidelines.
Regulation - 3. Scope.
(a) These regulations shall
include payment of commission or remuneration or reward, to insurance agents
and insurance intermediaries as defined in the Insurance Act, 1938, IRDA Act,
1999 and Regulations issued thereunder.
(b) Every insurer shall have a
written policy for payment of commission or remuneration or reward to insurance
agents and insurance intermediary which shall be approved by the Board of the
company.
(c) The objectives of the
Policy for payment of commission or remuneration or reward shall include the
utilization of insurance agents and insurance intermediaries in the manner
that:
(i)
increases
insurance penetration and density in the country;
(ii)
it
is in the interests of the policyholders;
(iii)
it
is commensurate with its business strategy;
(iv)
brings
cost efficiencies in the conduct of business and simplification of the
administration of insurance business; and
(v)
gives
an indication on the relative degree of importance placed on each of them.
(d) The Board approved policy
for payment of commission or remuneration or reward to insurance agents and
insurance intermediaries shall contain the following items at the minimum:
(i)
Manner
and conditions regarding payment of:
(1) commission or remuneration
to the insurance agents and insurance intermediaries;
(2) renewal commission (ERC
status), if any, to insurance agents after termination of agency;
(3) hereditary commission to
the heirs of an insurance agent in the event of the death of the insurance
agent;
(ii)
Manner
and conditions regarding transfer of orphan policies
(iii)
Grounds
and manner of termination, suspension and cancellation of appointment of
insurance agents and insurance intermediaries.
(iv)
Any
restrictions on the products to be sold by any of insurance agents and
insurance intermediaries.
(e) The company shall file the
Board approved policy for payment of commission or remuneration or reward to
insurance agents and insurance intermediaries to the Authority at the start of
the financial year and thereafter shall review the policy every year, and file
changes, if any, within 30 days of such changes.
Regulation - 4. Applicability.
(i)
These
regulations shall not be applicable to insurance products specified under
Insurance Regulatory and Development Authority of India (Micro Insurance)
Regulations, 2015 and [***]
such other insurance products as may be specified by the Authority from time to
time.
(ii)
These
Regulations supersede Regulation (9) of Insurance Regulatory and Development
Authority (Linked Insurance Products) Regulations, 2013 and Regulation (21) of
Insurance Regulatory and Development Authority (Non Linked Insurance Products)
Regulations, 2013.
(iii)
Where
policies are procured directly by an insurer, no commission or remuneration
shall be payable either to insurance agents or to the insurance intermediaries.
(iv)
No
Insurer shall pay both commissions to an insurance agent and remuneration to an
insurance intermediary on the same insurance policy.
Regulation - 5. Commission to Individual Insurance agents, remuneration to insurance intermediary.
(a) The commission or
remuneration to be paid to an insurance agent or an insurance intermediary
shall be decided by the insurer based on its Board approved policy.
(b) The maximum commission or
remuneration payable under life insurance products including health insurance
products offered by life insurers is given in Schedule I.
(c) The maximum commission or
remuneration payable under health insurance products offered by general
insurers or stand-alone health insurers is given in Schedule II.
(d) The maximum commission or
remuneration payable under general insurance (other than motor) products
offered by general insurers is given in Schedule III.
(e) The maximum commission or
remuneration payable under general insurance (motor) products offered by
general insurers is given in Schedule IV.
[(f) The maximum rate of
commission or remuneration payable by an insurer shall not exceed either:—
(i)
The
maximum specified by these regulations; or
(ii)
Any
other rate of commission or remuneration approved by the Authority under any
other Regulations or Guidelines whichever is lower]
Regulation - 6. Reward to individual insurance agent or insurance intermediary by insurers.
(a) The reward to be paid to an
insurance agent or an insurance intermediary over and above the commission or
remuneration shall be decided by the insurer based on an objective and
transparent criteria approved by the Board.
(b) For the purposes of rewards
under these regulations, there shall be broadly three channels of distribution
namely insurance agents, insurance intermediaries whose revenues from other
than insurance intermediation is fifty percent or less of their total revenue
from all the activities and insurance intermediaries whose revenues from other
than insurance intermediation is more than fifty percent of their total revenue
from all the activities.
(c) No reward shall be paid to
an insurance intermediary whose revenues from other than insurance
intermediation activities is more than fifty per cent of their total revenue
from all the activities.
(d) Reward — Life Insurance
(i)
Reward
in life insurance to be calculated on an overall basis for insurance agents and
insurance intermediaries respectively and not linked to each and every policy
solicited by an insurance agent or an insurance intermediary.
(ii)
Reward
being not more than 20% of first year commission or remuneration paid to
insurance agents and insurance intermediaries
(e) Reward — General Insurance
including health insurance
(i)
Reward
in the general insurance to be calculated separately for health insurance and
other than health insurance for insurance agents and insurance intermediaries
respectively and not linked to each and every policy solicited by an insurance
agent or an insurance intermediary.
(ii)
Reward
being not more than 30% of commission or remuneration paid to insurance agents
and insurance intermediaries
Regulation - 7. Return on payment of Commission, remuneration and reward by the insurer.
(a) All insurers, within 45
days of the expiration of each financial year, shall submit returns on payment
of commission, remuneration and reward by the insurer in format given
Schedule-V.
(b) The return shall be signed
by the Chief Executive Officer and Compliance Officer of the insurer.
(c) The Return shall be
reviewed by the Audit Committee prior to being placed for approval of the Board
of the Insurer.
Regulation - 8. Penalties.
Any breach or violation of
the provision of the Act or the Regulations shall make the insurer or an insurance
agent or insurance intermediary liable to a penalty as per provisions of the
Act.
Regulation - 9. Power of the Authority to issue clarifications etc.
In order to remove any
difficulties in application or interpretation of any of the provisions of these
Regulations, the Chairperson of the Authority may issue clarifications,
directions and guidelines in the form of circulars.
Schedule-I
Life
Insurance-Reg 5(b)
The maximum commission or
remuneration as a percentage of premium that is allowed for life insurance
products offered by life insurers is as under:
Table
I—Single Premium
|
Sl No
|
Category of Life Insurance Product or Policy
|
Maximum Commission/Remuneration on Single Premium
payable to insurance agent/insurance intermediary
|
|
1.
|
Single Premium
|
|
|
A
|
All individual life products except pure risk
products
|
2%
|
|
B
|
Individual Pure Risk products
|
7.5%
|
|
C
|
Individual Immediate/Deferred Annuity
|
2%
|
|
D
|
One year renewable group pure risk insurance
|
5% of premium paid during the year or Rs 10 lakhs
whichever is less
|
|
E
|
Group Pure Risk (incl Group credit)
|
5%
|
|
F
|
Group Savings Variable Life Insurance
|
2%
|
|
G
|
Group Fund based
|
0.5% of premium paid during the year or Rs10
lakhs whichever is less
|
Table
II—Regular Premium
|
Sl No.
|
Category of Life Insurance Product or Policy
|
Maximum Commission/Remuneration on Regular
Premium Products or Policies payable to insurance agent/insurance
intermediary
|
|
First year premium
|
Renewal Premiums
|
|
1
|
Regular Premium
|
|
|
|
A
|
Individual Pure Risk
|
40%
|
10%
|
|
B
|
Individual Other than Pure Risk
|
|
|
|
i)
|
In respect of policies with premium payment terms
of
|
|
|
|
|
5 years
|
15%
|
7.5%
|
|
|
6 years
|
18%
|
7.5%
|
|
|
7 years
|
21%
|
7.5%
|
|
|
8 years
|
24%
|
7.5%
|
|
|
9 years
|
27%
|
7.5%
|
|
|
10 years
|
30%
|
7.5%
|
|
|
11 years
|
33%
|
7.5%
|
|
|
12 years or more
|
35%
|
7.5%
|
|
C
|
Individual Deferred Annuity/Pension
|
7.5%
|
2%
|
|
D
|
Group Pure Risk (incl Group credit) and Group
Savings Variable Life
|
7.5% (only on pure risk premium)
|
7.5%
|
|
E
|
Government Scheme-Life-Health
|
As per Government Notification
|
As per Government Notification
|
Schedule-II
Health
Insurance (General & Stand-alone Health Insurers)-Reg 5(c)
The maximum commission or
remuneration as a percentage of premium that is allowed for health insurance
products offered by general insurers or stand-alone health insurers is as
under:
|
[S. No
|
Line of business
|
Maximum Commissions/Remuneration payable to
insurance agents/insurance intermediaries]
|
|
1
|
Health-Individual
|
15%
|
|
2
|
Health-Group (Employer-Employee only)-Annual
|
7.5%
|
|
3
|
Health-Group (Non Employer-Employee groups-not
formed solely for availing insurance as defined in IRDA Group Guidelines of
14th July, 2005)-Annual
|
15%
|
|
4
|
Health-Group (credit linked upto 5 years)
|
15%
|
|
[5
|
Health-Govt Scheme
|
As specified in the Government
Scheme/Notification]
|
Schedule-III
General
Insurance (other than motor)-Reg 5(d)
The maximum commission or
remuneration as a percentage of premium that is allowed for general insurance
(other than motor) is as under:
|
S. No
|
Line of business (Other than Motor)
|
Maximum Commission payable to insurance agent
|
Maximum remuneration payable to insurance
intermediary
|
|
1
|
Fire-Retail
|
15%
|
16.5%
|
|
2
|
Fire-[Commercial]
(Risks with S.I. < Rs 2,500 crs)
|
10%
|
11.5%
|
|
3
|
Fire-[Commercial]
(Risks with S.I. > Rs 2,500 crs)
|
5%
|
6.25%
|
|
4
|
Marine-Cargo
|
15%
|
16.5%
|
|
5
|
Marine-Hull
|
10%
|
11.5%
|
|
6
|
Miscellaneous — Retail
|
15%
|
16.5%
|
|
7
|
Miscellaneous — [Commercial]/Group
|
10%
|
12.5%
|
|
8
|
Miscellaneous — [Commercial]
(Engineering Risks with S.I. > Rs 2,500 crs.)
|
5%
|
6.25%
|
[Schedule-IV]
Motor
Insurance—Reg 5(e)
The maximum commission or
remuneration as a percentage of premium that is allowed for general insurance
(motor) is as under:
|
S. No.
|
Year
|
Maximum Commission/remuneration payable to
insurance agents/insurance intermediaries
|
|
|
|
Motor (Comprehensive)
|
Motor (Stand-alone TP)
|
|
|
|
Other than 2-wheeler
|
2-wheeler
|
Other than 2-wheeler
|
2-wheeler
|
|
1
|
Certificate of registration — 1st to
3rd Year
|
15% (OD portion) + Nil-TP portion)
|
17.5% (OD portion) + (Nil-TP portion)
|
2.5%
|
2.5%
|
|
2
|
Certificate of registration — 4th year onwards
|
15% (OD portion) + 2.5%-TP portion)
|
17.5% (OD portion) + 2.5%-(TP portion)
|
2.5%
|
2.5%
|
SCHEDULE V
[See
Regulation 7(a)]
Insurance Regulatory and
Development Authority of India (Payment of Commission or Remuneration or Reward
to Insurance Agent and Insurance Intermediaries) Regulations, 2016
Certificate to be submitted
by the insurer duly signed by CEO and Compliance Officer of the insurer
We hereby confirm that the
amounts paid as commission, remuneration and reward to insurance agent and
insurance intermediaries are as under:
Table—I Life Insurance (as applicable)
For the Financial Year:……
|
S. No.
|
Category/Lines of Business
|
1st Year Premium
|
Insurance Agent
|
Insurance Intermediary whose revenues from other
than insurance intermediation is 50% of their total revenue or less
|
Insurance Intermediary whose revenues from other
than insurance intermediation is > 50% of their total revenue
|
|
Commission
|
Reward
|
Remuneration
|
Reward
|
Remuneration
|
Reward
|
|
1.
|
Single Premium
|
|
A
|
All individual life products except pure risk
products
|
|
|
|
|
|
|
NIL
|
|
B
|
Individual Pure Risk products
|
|
|
|
|
|
C
|
Individual Immediate/Deferred Annuity
|
|
|
|
|
|
D
|
One year renewable group pure risk insurance
|
|
|
|
|
|
E
|
Group Pure Risk (incl Group credit)
|
|
|
|
|
|
F
|
Group Savings Variable Life Insurance
|
|
|
|
|
|
G
|
Group Fund based
|
|
|
|
|
|
|
TOTAL
|
|
|
|
|
|
|
NIL
|
|
2
|
Regular Premium
|
|
A
|
Individual Pure Risk
|
|
|
|
|
|
|
NIL
|
|
B
|
Individual Other than Pure Risk
|
|
|
|
|
|
C
|
Individual Deferred Annuity/Pension
|
|
|
|
|
|
D
|
Group Pure Risk (incl Group credit)
|
|
|
|
|
|
E
|
Group Savings Variable Life
|
|
|
|
|
|
|
|
|
F
|
Government Scheme-Life-Health
|
|
|
|
|
|
|
TOTAL
|
|
|
|
|
|
|
NIL
|
Table—II-Rewards-(Life)—as applicable
For the Financial Year:
|
S. No.
|
Description
|
Amount (Rs)
|
|
A
|
Insurance Agents
|
|
|
1
|
Gratuity
|
|
|
2
|
Term Insurance Cover
|
|
|
3
|
PA Cover
|
|
|
4
|
Medical Insurance
|
|
|
5
|
Telephone Charges
|
|
|
6
|
Office Allowance
|
|
|
7
|
Sales Promotion
|
|
|
8
|
Gift Items
|
|
|
9
|
Competition Prizes
|
|
|
10
|
Such other item (Please specify)
|
|
|
11
|
Total
|
|
|
B
|
Insurance Intermediaries
|
|
|
1
|
Risk Analysis
|
|
|
2
|
Gap Analysis
|
|
|
3
|
Plan Design
|
|
|
4
|
Predictive Modeling
|
|
|
5
|
Data Management
|
|
|
6
|
Risk Survey
|
|
|
7
|
Infrastructure charges
|
|
|
8
|
Advertisement charges
|
|
|
9
|
Such other item (Please specify)
|
|
|
10
|
Total
|
|
|
|
GRAND TOTAL (A+B)
|
|
Table—III General and Stand-Alone Health Insurance (as applicable)
For the Financial Year : ..
|
S. No
|
Category Lines of Business
|
Gross Direct Premium
|
Insurance Agent
|
Insurance Intermediary whose revenues from other
than insurance intermediation is 50% of their total revenue or less
|
Insurance Intermediary whose revenues from other
than insurance intermediation is > 50% of their total revenue
|
|
Commission
|
Reward
|
Remuneration
|
Reward
|
Remuneration
|
Reward
|
|
1.
|
GENERAL INSURANCE
|
|
A
|
Fire-Retail
|
|
|
|
|
|
|
NIL
|
|
B
|
Fire — [Commercial]
(Risks with SI < Rs 2,500 crs)
|
|
|
|
|
|
C
|
Fire — [Commercial]
(Risks with SI > Rs 2,500 crs)
|
|
|
|
|
|
D
|
Marine-Cargo
|
|
|
|
|
|
E
|
Marine-Hull
|
|
|
|
|
|
F
|
Miscellaneous-Retail
|
|
|
|
|
|
G
|
Miscellaneous-[Commercial]/Group
|
|
|
|
|
|
H
|
Miscellaneous-[Commercial]
(Engg Risks with SI > Rs 2,500 crs)
|
|
|
|
|
|
I
|
Motor (Comprehensive)
|
|
|
|
|
|
J
|
Motor (Stand-Alone TP)
|
|
|
|
|
|
|
TOTAL
|
|
|
|
|
|
|
NIL
|
|
2
|
HEALTH INSURANCE
|
|
A
|
Health—Individual—Annual
|
|
|
|
|
|
|
NIL
|
|
B
|
Health—Individual-3 yrs-Single Premium
|
|
|
|
|
|
C
|
Health—Individual-3 yrs-Regular Premium
|
|
|
|
|
|
D
|
Health-(Employer-Employee Group)-Annual
|
|
|
|
|
|
E
|
Health-(Non-Employer-Employee
|
|
|
|
|
|
|
Group)-Annual
|
|
|
|
|
|
|
|
|
F
|
Health-Group-(credit linked upto 5 yrs)
|
|
|
|
|
|
G
|
Health — Govt
|
|
|
|
|
|
|
TOTAL
|
|
|
|
|
|
NIL
|
Table — IV-Rewards-(General & Stand-Alone Health)-as applicable
For the Financial Year:
|
S.no.
|
Description
|
Amount (Rs)
|
|
A
|
Insurance Agents
|
|
|
1
|
Gratuity
|
|
|
2
|
Term Insurance Cover
|
|
|
3
|
PA Cover
|
|
|
4
|
Medical Insurance
|
|
|
5
|
Telephone Charges
|
|
|
6
|
Office Allowance
|
|
|
7
|
Sales Promotion
|
|
|
8
|
Gift Items
|
|
|
9
|
Competition Prizes
|
|
|
10
|
Such other item (Please specify)
|
|
|
11
|
Total
|
|
|
B
|
Insurance Intermediaries
|
|
|
1
|
Risk Analysis
|
|
|
2
|
Gap Analysis
|
|
|
3
|
Plan Design
|
|
|
4
|
Predictive Modeling
|
|
|
5
|
Data Management
|
|
|
6
|
Risk Survey
|
|
|
7
|
Infrastructure charges
|
|
|
8
|
Advertisement charges
|
|
|
9
|
Such other item (Please specify)
|
|
|
10
|
Total
|
|
|
|
GRAND TOTAL (A+B)
|
|
The amount includes all
payments paid directly or indirectly by the company and is in compliance with
the regulations prescribed by IRDAI.
Signed by
CEO
Compliance Officer
Place:
Date: