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Under the proposed framework, distributors could be rewarded for the quality of sales and servicing, while commissions could be clawed back in cases of mis-selling. The regulator has also proposed greater accountability for individual sales staff by tagging their identity to policies sold and putting information on mis-selling incidents in the public domain. “Proper claw back arrangements can be put in place for recovering excess payments for cases where policies are cancelled,” said IRDAI. “Any delay should attract payment of interest which should be charged to operating expenses.” Also read | PB Fintech forced to rethink business plan as India insurance commissions cap comes as a major shocker IRDAI said high distribution costs may be contributing to poor policy persistency, higher policy costs and commission-driven sales. IRDAI said that mis-selling incidences should also lead to commission claw-back by insurers. The regulator has proposed a ban on incentives to bank and NBFC employees that are linked to insurance sales volumes or rewards. The salesperson’s identity would also have to be tagged to each policy, making it easier to establish accountability for sales practices. The proposals seek to move the industry toward a system of pay for the right sale and pay for the right behaviour, with servicing and persistency forming part of the distribution economics. Also read | IRDAI proposals on insurance’s money machine leads to bloodbath for stocks: What happens to your money IRDAI has flagged the sharp rise in distribution costs as a concern. For private life insurers, the total expense ratio fell from 21.3% of gross premium in FY15 to 16.5% in FY21 before rising to 20.2% in FY26, according to the consultation paper. In general insurance, the ratio declined from 30.3% in FY15 to about 25% in FY19 before increasing to 32.1% in FY26. (What's moving Sensex and Nifty Track latest market news, stock tips, Budget 2025, Share Market on Budget 2025 and expert advice, on ETMarkets. Also, ETMarkets.com is now on Telegram. For fastest news alerts on financial markets, investment strategies and stocks alerts, subscribe to our Telegram feeds .) Subscribe to ET Prime and read the Economic Times ePaper Online.and Sensex Today. Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price (What's moving Sensex and Nifty Track latest market news, stock tips, Budget 2025, Share Market on Budget 2025 and expert advice, on ETMarkets. Also, ETMarkets.com is now on Telegram. For fastest news alerts on financial markets, investment strategies and stocks alerts, subscribe to our Telegram feeds .) Subscribe to ET Prime and read the Economic Times ePaper Online.and Sensex Today. Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price
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