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Life insurers get wiggle room on spends, but don’t expect commissions to surge

The new EoM rules, and the bunch of relaxations on capital and distribution tie-ups that IRDA has announced, should explain the surge in the shares of listed life insurers.

November 28, 2022 / 02:37 PM IST

When the insurance regulator’s proposals for limits on expenses of management (EoM) for life insurers turns into rules, insurers will get the much needed wiggle room to manage their costs. That said, it is unlikely that this would lead to a surge in commissions when intermediaries renegotiate their contracts.

EoM for life insurers includes the costs incurred to sell policies such as commissions to agents and other intermediaries, and other operating expenses like reinsurance.

Also Read: IRDAI eases investment and solvency norms, allows corporate agents up to 9 tie-ups

Last week, the Insurance Regulatory and Development Authority (IRDA) sought to consider an overall limit on the EoM for life insurers. This is a significant change from the current regime where limits are prescribed product-wise and premium tenure-wise. Notably, commissions would be subsumed in the overall EoM and the separate cap on commissions would be removed.