IRDAI flags concerns over high auto insurance commissions

24 Oct 2024 , 09:53 AM

In a meeting with senior executives from non-life insurance firms on Monday, India’s insurance regulator voiced worries about the large commission payments made to motor insurance service providers (MISP) in the “motor own damage” market.

According to data provided by the Insurance Regulatory and Development Authority of India (Irdai), commissions paid by insurers to MISPs for new private auto insurance contracts varied from 25% to 57% and higher.

The expansion of vehicle insurance has been aided by India’s automobile sector, which contributes 7.1% of the country’s GDP. Currently, this industry accounts for about 45% of general insurance companies’ overall revenue. Car dealers are now a vital distribution channel for auto insurance since they are the main middlemen in the customer’s purchasing process.

According to executives who attended the meeting, the regulator was especially worried about MISPs’ disproportionate commission payments, which are thought to be driving up the price of auto insurance for consumers.

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