Insurance Regulatory and Development Authority (Irda) has fixed the limits on payment of commission or brokerage on general insurance business, which would come into effect from October 1, this year.
As per an Irda circular, the maximum percentage of premium (final premium excluding service tax) payable as agency commission will be 10 and brokerage will be 12.5 in case of fire, IAR (industrial all risks) and engineering insurances.
It would be 5 and 6.25 per cent respectively with regard to risks treated as large risks.
For motor insurance business, both the agency commission and brokerage limit was fixed at 10 per cent. No agency commission or brokerage shall be payable for third party motor insurance.
The agency commission and brokerage limit for marine hull insurance will be 10 and 12.5 per cent, while it will be 15 and 17.5 per cent for marine cargo business and other business.
Irda stated that no brokerage could be paid in respect of an insurance where agency commission was payable. Similarly, no agency commission could be paid in respect of an insurance where brokerage was payable.
This apart, no payment of any kind, including administration or servicing charges, would be permitted to be made to an agent or broker who had been paid commission or brokerage.