The Insurance Regulatory and Development Authority of India has notified the payment of commission regulations, which come into effect from April.

The IRDAI has replaced the cap on commission payments in general and health insurance with an overall cap on the expenses of management at the company level.

The expenses of management include all operating expenses of the business, the commission of agents and intermediaries as well as commission and expenses on reinsurance.

In general insurance, the limit has been set at 30 per cent of gross written premium in a financial year, In standalone health insurance, the cap is set at 35 per cent.

“We firmly believe that a shift from product-level commissions to a company-wide limit of expenses, as proposed through the regulations, will ensure parity across varying business models while rendering greater flexibility in managing expenses for insurers,” said Tapan Singhel, MD and CEO, Bajaj Allianz General Insurance.

“It will facilitate greater product innovation, development of new product distribution models and lead to more customer-centric operations. Overall, it will smoothen adherence to compliance norms,” said Anil Kumar Aggarwal, MD and CEO, Shriram General Insurance.

Life insurance worry

Market analysts maintained a cautious outlook on the growth prospects of the life insurance industry following the government's decision to tax non-market linked insurance policies with premiums above Rs 5 lakh, which also comes into effect from April onwards.

“To move out of the shadow of tax benefits-driven growth model, the industry must address the elephant in the room — obscenely high direct and indirect cost,” said Emkay Research in a report on Tuesday.