IRDAI plans overhaul of insurance commission rules to curb mis-selling
The Insurance Regulatory and Development Authority of India (IRDAI) is reportedly working on a major reform of insurance commission structures to reduce mis-selling of policies. The regulator plans to shift from large upfront commission payments to a model where commissions are spread over the life of the policy. This is intended to better align the interests of agents with those of policyholders and improve persistency of policies. The changes may impact life and non-life insurance products and could alter the economics of insurance distribution in India. Insurers and distributors are expected to be consulted before final guidelines are notified. The move comes amid growing concerns about aggressive selling practices and early policy surrenders in the sector. Implementation details, including caps and transition periods, are likely to be crucial for market stability.
Try the question
IRDAI’s proposed reform in distributor commissions primarily aims to address which issue in the insurance sector?
Answer: (b) Mis-selling of insurance policies
The correct answer is (b) Mis-selling of insurance policies.