Insurance firms reduce broker commissions
Tuesday, 22 September 2009, 15:41 IST
By SiliconIndia
By SiliconIndia
Bangalore: In an attempt to control the rising losses on group health insurance covers, insurance firms are cutting down the commissions to insurance brokers. State-owned Oriental Insurance Company has sent out an internal circular stating that effective September 1, 2009, the maximum commission paid to a broker on a group health insurance policy will be capped up to five percent of the premium paid by the corporate from the current upper limit of 17.5 percent.
"This decision may result in us losing business to competitors who offer higher commission to brokers, but we are not worried as our focus is profitability and not just topline," said M Ramadoss, Chairman and Managing Director of Oriental Insurance. Oriental Insurance had an underwriting loss of Rs. 1,106 crore and a net loss of Rs. 53 crore for the year 2008-09, reports Hindustan Times.
New India Assurance has also reduced the broker's commission to 12.5 percent. "In case the past claim experience of a corporate is adverse, we load the premium or reduce the commission for the broker," said an official at New India Assurance.
"We would review brokerage on a case to case basis depending on the risk profile and the premium rates," said Rajive Kumaraswami, Head Reinsurance, ICICI Lombard General Insurance. Recently, J Hari Narayan, Chairman, Insurance Regulatory and Development Authority (IRDA), expressed his concern on corporate health business growing at 60 percent despite being a bleeding portfolio compared to retail and other profitable lines of businesses.
"This decision may result in us losing business to competitors who offer higher commission to brokers, but we are not worried as our focus is profitability and not just topline," said M Ramadoss, Chairman and Managing Director of Oriental Insurance. Oriental Insurance had an underwriting loss of Rs. 1,106 crore and a net loss of Rs. 53 crore for the year 2008-09, reports Hindustan Times.
New India Assurance has also reduced the broker's commission to 12.5 percent. "In case the past claim experience of a corporate is adverse, we load the premium or reduce the commission for the broker," said an official at New India Assurance.
"We would review brokerage on a case to case basis depending on the risk profile and the premium rates," said Rajive Kumaraswami, Head Reinsurance, ICICI Lombard General Insurance. Recently, J Hari Narayan, Chairman, Insurance Regulatory and Development Authority (IRDA), expressed his concern on corporate health business growing at 60 percent despite being a bleeding portfolio compared to retail and other profitable lines of businesses.
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