LIC, SBI Life Agents' Commission Cut Likely as Industry Shifts to Deferred Model

• Insurance companies like LIC and SBI Life are exploring ways to reduce agent commissions and distribution costs.
• IRDA is pushing insurers to cut expenses and make insurance products more affordable.
• A nine-member committee is discussing a "deferred commission model" to replace the current front-loaded commission system.
• The proposed model suggests spreading commission over initial years (e.g., 8% of premium over five years) instead of a large upfront payment.
• IRDA is also scrutinizing distribution and management costs for general and health insurance, with current limits at 30-35% of gross retained premium.

Why It Matters: Insurance agents' commissions may drop, potentially lowering policy costs for consumers.