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IRDA's new norms for insurance brokers, agents

IRDA on Thursday eased insurance norms and also fixed the agency commission and brokers' remuneration rates.

business Updated: Apr 02, 2004 13:06 IST

The Insurance Regulatory and Development Authority (IRDA) on Thursday eased norms by allowing PSUs and private companies with a capital of Rs 0.1-3 crore to bargain for a special discount of five per cent in exchange of agency commission or brokers remuneration, when they cover their risks directly with an general insurer.

Companies with a capital base of over Rs 3 crore would have the option of either availing the five per cent discount when they go for fire, petrochem, engineering and other tariff business directly with an insurer or seek the advise of brokers or agents.

In its circular to all general insurers, the IRDA also fixed the agency commission and brokers' remuneration rates, which vary between five-17.5 per cent depending on the type of risks covered and the size of the company.

The new rates will be applicable from April 1 for a period of one year.

Individuals have to pay an agency commission of 10 per cent or a brokerage of 12.5 per cent for insuring for fire and other risks covered under the tariff regime.

For companies having paid-up capital up to Rs 3 crore, the agency commission would be 10 per cent and brokerage up to 12.5 per cent while bigger companies with paid-up capital of Rs 3-25 crore have to pay agency commission up to 6.25 per cent while the brokerage would be up to 7.5 per cent.

Companies with paid-up capital of above Rs 25 crore would now have to pay agency commission of up to five per cent or brokerage of up to 6.25 per cent.

For motor insurance, the agency commission and brokerage have been pegged at up to 10 per cent.

First Published: Mar 04, 2004 16:41 IST