Introduction-
In India, health insurance agents receive an earning in the form of a commission based on the premium of policies sold. These rates vary on the selling insurance company, the risk taken on the policy, and the level of risk available for the policy.
A mix of factors determines the commission rates-
1. Insurance Company- For every policy, the amount of commission varies depending on the company offering it.
2. Policy Type- The type of policy sold either individual policies or family floater policies amounts of policy pay rates.
3. Experience- Different agents sometimes specialize in different markets, the more experienced an agent is, the better the odds of higher commissions.
4. Policy Duration- The period of a policy affects the value of the commission as the longer it is, the more out-of-pocket expenses paid.
5. Regulatory Controls- The IRDAI acts as a regulating body ensuring proper practices regarding commission rates are met.
6. Performance- Those agents who write more policies and earn more premium income are placed in a position where they may receive extra bonuses.
Commission Rates-
Even though rates can vary, most health insurance agents earn melas ranging from about 10 % to 15 % on the first-year premium for policies they underwrite in India. If this were the case and an insurance policy was sold with a premium of Rs. 10,000 an agent would get a commission of Rs. 1000-Rs.1500.
Diverse Channels for Earning Income-
Commission for Renewal- These are minor fees paid yearly for the renewal of already existing policies.
Incentives Depending On One’s Output- It is common practice for insurance companies to give out additional payments for hitting certain sales targets or for looking after a high number of clients.
Referral Commission- Insurance representatives may put forth new clientele, thus earning a commission for referring clients.
Factors Influencing Earnings-
1. Volume of Sales- The number of policies sold or the business done together with the conditions affects the income of the agent.
2. Knowledge Of Product- Good knowledge of different health insurance products enables agents to offer appropriate products to their clients resulting in higher sales.
3. Client Relations- Good client relations may help retain clients and obtain referrals.
4. Economic Environment- The general economy and trends in the healthcare sector may also determine the take up of health insurance.
5. Changes in the law- The IRDAI regulatory reforms may also lead to changes in the commission and inducements paid to the agents.
Is it alright to accept the commission?
It is ok to accept the commission but to be safe, the agent must adhere to all the rules and regulations put by the Insurance Regulatory and Development Authority of India (IRDAI). It’s the statutory authority for governance of the insurance sector in India including strict provisions to safeguard all policyholders and agents.
When taking commissions, here are some of the key rules that one should follow-
First- the agent should share the commission amount with the policyholder.
Second- the agent must not oversell or exaggerate any aspect of the policy or the insurance company while marketing the policy.
Thirdly- no further costs or fees over and above the premium amount set by the policyholder shall be levied by the policy agents.
In case an agent breaks any of these laws, an individual could be liable for punishment by the IRDAI and could be fined or their license could be suspended.
Conclusion-
Health insurance agents in India have the possible prospects to earn meaningful income, more specifically if the agents possess strong sales skills, product depth, and commitment to customer care. It is however worth mentioning that income may also be affected by quite several factors. To achieve the best earnings, agents should seek to create customer relations that are permanent with their clients and keep up with new developments in the industry.
FAQ-
1. What is the rate of commission for selling health insurance by agents?
Health insurance agent commission is calculated from the premiums that the policyholder has paid for coverage. This is mainly paid by the insurer to the agent instead of such policy sales.
What are the profits of medical coverage specialists in India concerning commission?
It varies but largely the commission basis ranges from 10% to 15% of first-year premium. However, this may vary based on the insurance company, policy, type, and experience of the agent.
3. Is it common for agents to get paid again for simply closing the policy after the term has expired?
Yes, there are renewal commissions that several agents may also receive from the insurance companies upon re-selling the insured products. Most of these commissions are however lower than initial endorsement commissions.
