Kathmandu. The provision in the Insurance Rules 2081 that the incentive amount provided to the insurance agent in addition to the regular commission should not exceed the prescribed limit has now become a headache for the insurer. The full implementation of this provision will cut the three-tier incentive facility currently being enjoyed by the agent.
Rule 44 of the Insurance Rules, 2081 provides that in addition to the commission amount referred to in (2) sub-rule (1), an incentive amount may be provided on the first insurance premium of life insurance not exceeding the limit set by the insurance authority. The Nepal Insurance Authority has set a maximum limit of 18 percent of the first insurance premium earned by the concerned agent.
Although the life insurer should ensure the facility of incentive to the agent within the maximum limit set by the Insurance Regulations and the Authority, the Life Insurer has ignored the provision of Section 44 of the Insurance Regulations and now the Insurance Authority has started seeking clarification as to why the incentive is more than 18 percent per agent against the provision of the Regulation.
Although the insurer has been keeping the total amount of the agent incentive within the limit of 18 percent of the first insurance premium, it has not applied this limit per agent.
What is the incentive facility?
In a life insurance company, the incentive amount is provided not only to the agent who brings in the insurance premium on the basis of the income of the first insurance premium, but also to the agent leader who provides professional training to those agents, teaches them the art of selling, and helps in the expansion of the agent network. There are two types of agents who avail the benefits of such incentives. In which the first is given the designation of Business Developer (BD) and the second is given the designation of Agency Manager (AM). Apart from this, the life insurer is also providing additional incentives to the same agent on the basis of various aliases such as Chairman Club, CEO Club, MDRT.
