Non-life insurers have requested IRDA (Insurance Regulatory and Development Authority) to relax the limit on their total expenses to expand their business operations, according to media reports.
Non-life insurers have said that currently the cap on total expenses is 28% of the gross direct premium. The ceiling on their overall expenses hampers their expansion plans, the media reports added.
The limit on the total expenses was introduced to ensure that customers do not end up paying high premiums for the over-spending of insurers due to huge salaries and commissions. According to insurers, at present their management expenses—which include wages, advertising & marketing, fund management, etc—are around 20%. Apart from this, insurers also have to spend around 17.5% of the gross direct premium on agent fee and third party administrators’ commission, the reports added further.
The issue was raised by the non-life insurers during a meeting on Monday with finance ministry and IRDA. Non-life insurers have proposed for a higher ceiling of 32.5%-37.5% on overall expenses A decision will be taken by the regulator soon, the reports concluded.
