From The Economic Times · Shilpy Sinha · · 1m 10s
IRDAI Proposes Commission Clawback for Mis-selling
IRDAI plans to claw back insurance commissions when policies are mis-sold, tagging sales staff to policies for accountability.
In brief
IRDAI plans to claw back insurance commissions when policies are mis-sold, tagging sales staff to policies for accountability. IRDAI proposes clawing back insurance commissions from sales staff in cases of mis-selling to improve accountability and policy persistency. Originally reported by The Economic Times.
IRDAI Proposes Commission Clawback
IRDAI has proposed clawing back commissions from insurers in cases of mis-selling while making sales staff more accountable by tagging their identity to policies sold.
“Proper claw back arrangements can be put in place for recovering excess payments for cases where policies are cancelled”
Tagging Sales Staff to Policies
The regulator requires the salesperson’s identity to be tagged to each policy sold and places mis-selling incidents in the public domain for transparency.
Ban on Sales Incentives
IRDAI has proposed banning incentives for bank and NBFC employees linked to insurance sales volumes or rewards to prevent mis-selling.
Distribution Costs Rise
IRDAI flagged a sharp rise in distribution costs for private life insurers from 21.3% to 20.2% of gross premium in FY15 to FY26, affecting policy persistency.
Policy Persistency Concerns
IRDAI states that mis-selling incidents should lead to commission claw-back by insurers to improve policy persistency and reduce distribution costs.
What to remember
IRDAI proposes clawing back insurance commissions from sales staff in cases of mis-selling to improve accountability and policy persistency.
