DFS Questions Insurers on High Commission Payouts

The Department of Financial Services (DFS) in India has asked insurance companies for details about the high commissions they pay to their distributors.

Even though insurance companies paid over Rs 1 lakh crore in commissions last year, the number of policies issued and lives covered actually decreased.

This makes insurance more expensive for people.

Life insurers paid 18% more in commissions, while non-life insurers paid 19% less.

The DFS wants to know why these high commissions aren't leading to more growth in the insurance business.

Some companies have even broken the rules about how much they can spend on operations.

The life insurance sector saw a 7.12% increase in paid-up capital, with profits growing by 18.14% in 2024-25.

The GST rate cut is expected to boost premium growth and profitability, but margins may come under pressure due to the loss of input tax credit (ITC).

Analysts project mixed performance for life and general insurers in the third quarter, with varying impacts on premiums and profits.