Over 30 lakh insurance agents in the country may suffer a huge jolt this Parliament session, should the provisions relating to agency commission in the insurance amendment Bill get approval.
Because the Bill does away with Section 40A of the Insurance Act, 1938, which prescribes the amount of commission an insurance company can pay its agents.
The agents, currently at loggerheads over the recommendations of the D Swarup Committee, could be in for a double whammy if the panel’s recommendations on agency commission and related provisions in the Bill pass muster.
The Bill also omits Section 40, which talks about the total commission that can be paid in the first five years as well as section 44, which concerns hereditary commission payable to agents in the event of the death of the agent or on quitting the company.
Further, section 45, which talks about the right to question and punish an agent in the event of a policyholder’s death within 2 years, has been altered to read 5 years.
Going by industry sources, the Bill has omitted Section 40A with the intention of bringing it under the direct purview of the insurance regulator, which could come up with a commission formula in due course.
“To be frank, if one calculates the commission for the total sum assured, then for a conventional plan of Rs 1 lakh cover, the commission works out to 5% of the total premium paid over a period of 20 years. Agency commission ranges from 0.3% in unit linked plans to 5% in conventional plans if calculated on the sum assured,” R S Ramanujam, general secretary, Life Insurance
Agents Federation of India, south central zone said.
“We are against it (provisions in the Bill) and this is not supportive of agents. We want all the classes to remain unchanged as per the Insurance Act 1938 unless a better alternative is given. Removing these sections will definitely panic the agents,” he said.
A section of agents working for private sector insurance companies said they have come together under one platform to jointly protest the implementation of the provisions proposed in the Bill.
(Source: http://www.dnaindia.com/dnaprint.asp?newsid=1324130)
Because the Bill does away with Section 40A of the Insurance Act, 1938, which prescribes the amount of commission an insurance company can pay its agents.
The agents, currently at loggerheads over the recommendations of the D Swarup Committee, could be in for a double whammy if the panel’s recommendations on agency commission and related provisions in the Bill pass muster.
The Bill also omits Section 40, which talks about the total commission that can be paid in the first five years as well as section 44, which concerns hereditary commission payable to agents in the event of the death of the agent or on quitting the company.
Further, section 45, which talks about the right to question and punish an agent in the event of a policyholder’s death within 2 years, has been altered to read 5 years.
Going by industry sources, the Bill has omitted Section 40A with the intention of bringing it under the direct purview of the insurance regulator, which could come up with a commission formula in due course.
“To be frank, if one calculates the commission for the total sum assured, then for a conventional plan of Rs 1 lakh cover, the commission works out to 5% of the total premium paid over a period of 20 years. Agency commission ranges from 0.3% in unit linked plans to 5% in conventional plans if calculated on the sum assured,” R S Ramanujam, general secretary, Life Insurance
Agents Federation of India, south central zone said.
“We are against it (provisions in the Bill) and this is not supportive of agents. We want all the classes to remain unchanged as per the Insurance Act 1938 unless a better alternative is given. Removing these sections will definitely panic the agents,” he said.
A section of agents working for private sector insurance companies said they have come together under one platform to jointly protest the implementation of the provisions proposed in the Bill.
(Source: http://www.dnaindia.com/dnaprint.asp?newsid=1324130)
i am an agent of lic since april 2000, now i want to resign from lic, what about my renewal commissions? please tell me on my email: anupam.baranwal@gmail.com
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