Insurance regulator's new distribution rules draw pushback from LIC agents and brokers

New proposed rules by the insurance regulator have drawn strong objections from groups representing Life Insurance Corporation agents and insurance brokers over fears for jobs and earnings.

Agent Concerns

The Life Insurance Agents' Federation of India stated that cost-cutting should not reduce the number of active agents or make the job economically unviable. Secretary General B. Markandeyulu warned that lower earnings could discourage new entrants and harm the existing workforce. While supporting strict action against fraud and mis-selling, the federation wants regulators to separate intentional misconduct from honest mistakes.

Broker Objections

The Insurance Brokers Association of India criticized the consultation paper titled 'Recalibrating economics of insurance distribution'. The association warned that thirty separate commission caps and a one-third cut in overall expense limits will hurt policyholders rather than protect them. IBAI plans to submit its detailed response by October 25 and will press the regulator to keep the 2023 expense-of-management framework.

Context

Insurance regulations often try to balance lower costs for customers with fair pay for the people who sell policies. Major policy shifts regularly spark debates between regulatory bodies and field agents who rely on commission structures for their livelihood.