IB lowers commission of non-life insurance agents
KATHMANDU, Jan 16: The Insurance Board (IB) has lowered the commission of non-life insurance agents by one-third in an attempt to discourage unholy nexus between staff of insurance companies and agents.
In a new directive issued Wednesday, the insurance sector regular capped agent commission at 5 percent.
Lured by attractive commission of 15 percent, staff members of insurance companies were found creating dummy agents.
The new directive envisages discouraging unhealthy practice in insurance sector. “Rise in business volume of non-life insurance companies and subsequent increment in commission income prompted IB to take the fresh move,” the directive states.
IB Spokesperson Raj Kumar Aryal said the new directive is aimed at controlling the growing tendency of creating dummy agents by staff members of insurance companies. According to Aryal, mostly the staff members in market division are involved in creating dummy agents and securing commission from the companies.
IB has clarified that the directive is for all non-life insurance portfolios except the third-party insurance and insurance for damage and loss under riot, sabotage, malicious damage and terrorism.
Officials of the insurance sector regulator said the new directive would cut management expenditure of insurance companies and increase their income.
IB took the decision have holding discussion with CEOs of 17 non-life insurance companies. The discussion was held on December 18 last year.
In the meeting, some CEOs had requested IB officials to take necessary measures to control unhealthy practices in non-life insurance business in the name of agent commission.
IB officials also said that agents as such are not necessary for non-life insurance companies. Non-life insurance companies in Nepal sell portfolios like motor, marine, engineering and contractor´s risk, aviation and miscellaneous heads.
The Insurance Regulations 1993 authorizes IB to set commission rate for agents of insurance companies.
(Source: Republica)
