Insurance companies are considering cutting commissions for distributors after passing on the full GST benefit on health insurance to policyholders. Web aggregators are expected to face the largest impact, while banks and agents may see smaller reductions.
Insurance companies are in discussions to reduce the commissions paid to distributors, including web aggregators, banks and individual agents, following the government’s decision to exempt health insurance from the 18% GST.
The move comes after insurers passed on the full benefit of the GST reduction to policyholders, which has resulted in an additional cost burden of 5% to 8% depending on the size of the retail portfolio.
According to sources, chief distribution officers of large insurance companies have been deliberating on how to share this cost with various distribution channels. While the reduction in commission for agents and banks is expected to be relatively low, web aggregators could see a higher impact as insurers treat agents more like internal representatives.
The collective decision by insurance companies to adjust commissions is expected to be communicated to all distributors soon. The move is likely to affect web aggregators, including Policy Bazaar, which earns a significant portion of its revenue from health insurance.
CNBC-TV18 has written to Policy Bazaar with this query, but a response from them is still awaited.
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