NBFCs seek 5-year phase-in for insurance commission caps
In short
NBFCs told IRDAI that the proposed 2% cap on credit life insurance and 5% cap on credit health insurance could make selling these products unviable. They said distribution costs are about 32% of the premium and asked for a five-year transition period.
This matters because it could affect how easily lenders sell insurance with loans. It is not stated whether IRDAI will accept the request or change the caps.
What the reporting says
NBFC industry body told IRDAI that proposed commission caps of 2% on credit life and 5% on credit health insurance would make credit-linked insurance distribution unviable. The source says distribution costs are about 32% of premium, which is why the group wants a five-year transition period. The immediate outcome is not stated in the available reporting.
Why it matters
NBFCs have asked IRDAI for a five-year transition period after the regulator proposed commission caps of 2% for credit life and 5% for credit health insurance. The industry body says distribution costs are about 32% of premium, making the business model difficult. The reporting does not say whether IRDAI will revise the caps or how many lenders would be affected.