IDRA halts commission issuance to agents

Staff Correspondent | Published: 22:16, Feb 05,2021

 
 

The Insurance Development and Regulatory Authority on Thursday suspended a provision that allowed payment of up to 15 per cent commission to agents on opening insurance policies by non-life insurance companies.

The decision will come into force from March 1.

In a circular signed by IDRA chairman M Mosharraf Hossain, the insurance regulator said that it had made the decision to bring discipline in the sector and the suspension would remain in effect until the IDRA publishes the insurance agent appointment and registration regulations under the Insurance Act 2010.

Earlier in April 2012, IDRA asked the non-life insurance companies not to issue more than 15 per cent commission to their agents against insurance policies opened through the agents.

The circular said that the measure was taken after a number of past initiatives failed to bring discipline in the commission issuance process.

There are allegations of unhealthy competition among the insurance companies over the offering of commissions to the agents.

Instead of 15 per cent, the rate of commission will now be zero, the circular said.

The companies will also not be allowed to pay salaries, allowances and other benefits to the development employees in proportion to the collected premium.

The salaries for employees, except for contractually appointed ones, should be fixed as per the pay scale of the companies and the payment should be made through the banking channel, it added.

The companies will also have to furnish monthly reports to the IDRA in a prescribed form on their payments to the development employees within seven days of the immediate next month.

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