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IRDAI’s proposed commission overhaul may halve health, term payouts; PB Fintech, Turtlemint face earnings risk

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IRDAI’s proposed commission overhaul may halve health, term payouts; PB Fintech, Turtlemint face earnings risk

IRDAI’s proposed commission overhaul may halve health, term payouts; PB Fintech, Turtlemint face earnings risk

Jefferies estimates a 10% cut in new-business commission rates could translate into a 10-12% earnings decline for distributors; insurers face a trade-off between slower growth and lower acquisition costs.

New Delhi, Sep 24 (IANS) The Insurance Regulatory and Development Authority of India (IRDAI) has proposed a new ceiling for commissions on individual life insurance policies, aiming to curb upfront sales incentives and encourage policyholders to persist with multiyear payment plans.

The proposed overhaul of insurance distribution regulations could sharply compress commissions for distributors, particularly in health and term insurance , while creating a more mixed impact for insurers, according to Jefferies . The brokerage said the proposed framework could cut new-business commissions in health and term insurance by at least half, while commissions on new motor own-damage business could fall by about one-third. Advt

For distributors such as PB Fintech and Turtlemint, the impact could be material because Jefferies estimates that a 10% reduction in new-business commission rates could translate into a 10-12% decline in earnings. Health, term commissions face steep cuts Under the proposed structure, commissions would be capped based on product, distribution channel and architecture, with different limits for insurance distribution entities and agents. For general insurance, Jefferies highlights proposed caps including 15% for first-time individual health business through insurance distribution entities and 20% for agents, while renewal commissions would be capped at 5% and 10%, respectively. For motor own-damage, the proposed cap is 5% for insurance distribution entities and 10% for agents, while motor third-party insurance would carry lower caps.


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