IRDAI proposes clawback of commissions in case of mis-selling
Under the proposed framework, distributors could be rewarded for the quality of sales and servicing, while commissions could be clawed back in cases of mis-selling. The regulator has also proposed greater accountability for individual sales staff by tagging their identity to policies sold and putting information on mis-selling incidents in the public domain.
The Insurance Regulatory and Development Authority of India (IRDAI) has suggested a new framework that could result in the recovery of commissions from insurers in cases of mis-selling. This initiative aims to make individual sales staff more accountable by linking their identity to policies sold. The regulator has also proposed banning incentives to bank and NBFC employees that are tied to insurance sales volumes or rewards.
Additionally, the IRDAI is planning to require the salesperson's identity to be tagged to each policy, which will help establish accountability for sales practices. The proposed changes seek to promote a system of rewards for appropriate sales and behavior, incorporating service and retention aspects into the distribution economics.
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