KATHMANDU, AUG 2, 2012
Insurance agents have stopped taking new clients to protest against the regulator’s latest move of capping their incentives.
Insurance Board had dictated the incentives being provided to insurance agents along with business promotion to a maximum of six per cent of the annual gross premium income, starting from the current fiscal year.
Insurance agents –– both life and non-life –– are on strike from July 16 and have not sold any insurance policies from the day the circular was implemented, demanding the regulator to revoke the decision.
“We have decided to stop selling policies until the board withdraws the limit on our incentives,” said secretary of Life Insurance Agents Association of Nepal Krishna Acharya.
The insurance regulator has capped the incentives being doled out by the insurance companies to insurance agents in order to bring down the expenses of the companies. It had put a limit on such expenses and incentives as the financial burden for the companies had started to strain the income of the companies.
“Commission is for selling policies while incentives are remuneration for agents’ bid to create awareness among prospective buyers which in turn expands a company’s business,” Acharya pointed out, adding that incentives does not amount to about 1.3 per cent of the total premium income which is not a large sum that will put pressure on a company’s profit.
The Insurance Board has
already fixed the commission rate that insurance agents are supposed to be paid based on the maturity period and the type of policies from 10 per cent to 25 per cent of the total premium amount.
“Due to the fierce competition between the companies to retain agents and in turn their clients, companies have been giving away higher amounts as incentives, which minimises the return on the insurance policies thus victimising the beneficiaries,” said an official of the Insurance Board .
The companies were giving away large sums of money as incentives to retain their insurance agents as instances of agents defecting to other companies for better perks had started to rise recently.
“Moreover, the insurance regulator took the decision
to cap incentives and unnecessary expenses of the insurance companies to ensure that
they are not short of funds
to pay the claims,” added the board official.
There are about 90,000 licensed insurance agents working in the Nepali insurance market for 25 insurance companies. There are 26 financial institutions and cooperatives that have licence to work as insurance agents.
Source: THT
Insurance agents have stopped taking new clients to protest against the regulator’s latest move of capping their incentives.
Insurance Board had dictated the incentives being provided to insurance agents along with business promotion to a maximum of six per cent of the annual gross premium income, starting from the current fiscal year.
Insurance agents –– both life and non-life –– are on strike from July 16 and have not sold any insurance policies from the day the circular was implemented, demanding the regulator to revoke the decision.
“We have decided to stop selling policies until the board withdraws the limit on our incentives,” said secretary of Life Insurance Agents Association of Nepal Krishna Acharya.
The insurance regulator has capped the incentives being doled out by the insurance companies to insurance agents in order to bring down the expenses of the companies. It had put a limit on such expenses and incentives as the financial burden for the companies had started to strain the income of the companies.
“Commission is for selling policies while incentives are remuneration for agents’ bid to create awareness among prospective buyers which in turn expands a company’s business,” Acharya pointed out, adding that incentives does not amount to about 1.3 per cent of the total premium income which is not a large sum that will put pressure on a company’s profit.
The Insurance Board has
already fixed the commission rate that insurance agents are supposed to be paid based on the maturity period and the type of policies from 10 per cent to 25 per cent of the total premium amount.
“Due to the fierce competition between the companies to retain agents and in turn their clients, companies have been giving away higher amounts as incentives, which minimises the return on the insurance policies thus victimising the beneficiaries,” said an official of the Insurance Board .
The companies were giving away large sums of money as incentives to retain their insurance agents as instances of agents defecting to other companies for better perks had started to rise recently.
“Moreover, the insurance regulator took the decision
to cap incentives and unnecessary expenses of the insurance companies to ensure that
they are not short of funds
to pay the claims,” added the board official.
There are about 90,000 licensed insurance agents working in the Nepali insurance market for 25 insurance companies. There are 26 financial institutions and cooperatives that have licence to work as insurance agents.
Source: THT
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