The IRDAI has repealed its guideline capping the commission for long-term motor insurance policies, aligning these policies with the standard one-year motor insurance policies.
Under the updated rules, insurers have the freedom to tailor commission structures according to their management expenses.
In a circular released last week, the IRDAI said, “Consequent to the notification of IRDAI (Expenses of Management, including commission, of insurers) Regulations, 2024, the circular on 'Payment of Commission, remuneration, rewards· and distribution fees under Long Term Motor Insurance Policies' Circular No. IRDA/INT/CIR/Comm/139/08/2018 dated 29 August 2018 has become redundant. Hence, the mentioned circular stands repealed.”
Before this, insurers could pay up to 17.5% of the premium as the first-year commission for five-year comprehensive motor insurance policies for two-wheelers. This commission was reduced to 10% for the second and third years and 5% for the fourth and fifth years.
For three-year comprehensive motor insurance policies for four-wheelers, the commission cap was originally set at 15% for the first year, 10% for the second year, and 5% for the third year.
To read the circular, please click here.