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.[3] The regulator plans to shift from large upfront commission payments to a model where commissions are spread over the life of the policy.[3] This is intended to better align the interests of agents with those of policyholders and improve persistency of policies.[3] The changes may impact life and non-life insurance products and could alter the economics of insurance distribution in India.[3] Insurers and distributors are expected to be consulted before final guidelines are notified.[3] The move comes amid growing concerns about aggressive selling practices and early policy surrenders in the sector.[3] Implementation details, including caps and transition periods, are likely to be crucial for market stability.[3]
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.