IRDAI makes it mandatory for insurance brokers to disclose commission details for traditional life products. Learn more about it right here.
Those who choose to buy a life insurance policy can now question their agent on how much commission would be paid from the premium. The agent would have no other option but to disclose this information to the customer. Previously, this was applicable only for unit-linked insurance plans (ULIPs).
On customer demand for authenticity, agents can also be asked to show their identity card and appointment letter. Upfront information would have to be provided to the policy holder about changes in the policy being approved or rejected. Simultaneously, the agent can’t conceal facts from the insurance company about whether the policyholder is a smoker or non-smoker as it could hamper the underwriting.
In the past, such information used to be withheld to ensure the policy is approved. Recently, the Regulations for Appointment of Insurance Agents that is notified by the Insurance Regulatory and Development Authority of India (IRDAI) has prescribed transparency as its main feature in the code of conduct for insurance brokers. While the earlier codes were being religiously followed, the latest one has to be implemented by insurance brokers.
As per the regulations, agents should not offer different rates, advantages, terms and conditions apart from those offered by the insurer. They cannot demand or receive a share of proceeds from the beneficiary or compel a policyholder to terminate the existing policy and buy a new one from him within three years.
If an agent fails to comply with the code of conduct, he can be penalized up to Rs. 10,000 and insurance company can face penalty as agents are accountable to them.
Customers can ask the insurance agent to demonstrate how the insurance product functions and find out if it satisfies their needs. A copy of the product brochure that is supplied by the insurer to the agent can be demanded by the customer. In fact, details such as insurance premium charged, mode of payment, exclusions, nomination facility have to be mandatorily disclosed by the agent.
Remember that IRDAI’s centralized list of blacklisted agents can be verified by the customer just by entering a few inputs such as the agent’s name, license number, type of insurance policy, and name of the insurance company, state and district. Certain insurers also publish the blacklist on their website so that customers can directly lodge complain with the insurance company or through IRDAI portal.