These regulations shall include payment of commission or remuneration or reward, to insurance agents and insurance intermediaries as defined in the Insurance Act, 1938, IRDA Act, 1999 and Regulations issued thereunder. Every insurer shall have a written policy for payment of commission or remuneration or reward to insurance agents and insurance intermediaries which shall be approved by the Board of the company.
The objectives of the Policy for payment of commission or remuneration or reward shall include the utilization of insurance agents and insurance intermediaries in the manner that:
(i) Increases insurance penetration and density in the country;
(ii) It is in the interests of the policyholders;
(iii) It is commensurate with its business strategy;
(iv) Brings cost efficiencies in the conduct of business and simplification of the administration of insurance business; and
(v) Gives an indication on the relative degree of importance placed on each of them
These regulations shall not be applicable to insurance products specified under Insurance Regulatory and Development Authority of India (Micro Insurance) Regulations, 2015 and Insurance Regulatory and Development Authority of India (Insurance Services by Common Service Centre) Regulations 2015 and such other insurance products as may be specified by the Authority from time to time. No Insurer shall pay both commissions to an insurance agent and remuneration to an insurance intermediary on the same insurance policy.
The reward to be paid to an insurance agent or an insurance intermediary over and above the commission or remuneration shall be decided by the insurer based on an objective and transparent criteria approved by the Board. For the purposes of rewards under these regulations, there shall be broadly three channels of distribution namely insurance agents, insurance intermediaries whose revenues from other than insurance intermediation is fifty percent or less of their total revenue from all the activities and insurance intermediaries whose revenues from other than insurance intermediation is more than fifty percent of their total revenue from all the activities.
