Home BusinessInsurance agents oppose elimination of commission
About 25 lakh life insurance agents have opposed the recommendations of Swarup Committee on elimination of upfront commission paid to advisers. "Implementation of the recommendation will make the role of 25 lakh life insurance agents working with LIC and private insurers redundant and adversely affect crores of people who are dependent on them," Life Insurance Agents" Federation of India President H M Jain told reporters here.
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Firms instead of eliminating the commission should look at reducing management expenses and risk premium, he said. The Committee on Investor Awareness and Protection, headed by interim PFRDA Chairman D Swarup, in its consultation paper had proposed elimination of upfront commission paid to insurance agents by April 2011.
"Immediately the upfront commissions embedded in the premium paid (to agents by insurance companies) be cut to not more than 15 per cent of the premium. This should fall to 7 per cent in 2010 and become nil by April 2011," a consultation paper prepared by the committee had said.
Jain said that agents" commission has already come down to 14 per cent in 2008-09. The commission as percentage of total premium is as low as 6.9 per cent.
In country like India insurance was not bought but it was sold, Jain said, adding that the elimination of commission would hurt the industry and starve the nation of long-term capital for development.