Do away with insurance agents' commission by 2011: Govt panel

A government-appointed committee today proposed phased elimination of upfront commission paid to insurance agents, a suggestion if accepted would directly affect 30 lakh agents.

"Immediately the upfront commissions embedded in the premium paid (to agents by insurance companies) be cut to no more than 15 per cent of the premium. This should fall to 7 per cent in 2010 and become nil by April 2011", said the consultation paper prepared by Committee on Investor Awareness and Protection.

The Committee said, the insurance companies should "help their agents make transition to a more mature way of selling and advising" their clients.

The paper also made a case for elimination of entry and exit charges for all financial products. "All retail financial products should go no-load by April 2011", it said, pointing out that no entry and exit charges are levied under the New Pension System.

Besides elimination of commission for insurance agents, the Committee also suggested setting up of a Financial Well-Being Board of India (FINWEB) to improve financial literacy.

The Committee, headed by the Pension Fund Regulatory and Development Authority Chairman D Swarup will elicit views of the stakeholders before submitting its report to the government by month-end.