Insurance Stocks: The government and IRDAI are now preparing to impose strict controls on excessive commissions in the insurance sector. In a media interaction, DFS Secretary M. Nagaraju expressed concern over the issue, stating that protecting the interests of policyholders is a priority. Meanwhile, IRDAI is also planning to tighten regulations on high commissions in the motor own-damage and health insurance segments.
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According to sources, IRDAI has started requesting segmental commission payout data from insurance companies. A draft regulation is also being prepared to implement commission controls. The objective is to ensure that companies do not pay excessive commissions, which could lead to problems for policyholders, such as increased premiums or a decrease in the Incremental Capital Ratio (ICR).
The DFS Secretary clarified that the government wants IRDAI to have the authority to monitor commission distribution and distribution costs. This will ensure that no company pays excessive commissions and that policyholders are protected from financial losses. Experts say that this move could impact stocks like HDFC Life, Max Financial, ICICI Lombard, Star Health, and PB Fintech.
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Potential amendments to the Insurance Act could set limits on the commissions paid by companies. Furthermore, it will ensure that excessive commissions do not negatively impact premiums and ICR, keeping the interests of policyholders in mind. Through this new initiative, both the government and IRDAI aim to increase transparency in the distribution process and control unfair practices in the market.