Agents struck by commission-refund policy

Tuesday 24, July, 2012 Private life insurers take step to improve persistency ratio and arrest policy lapses. An agent of a Mumbai-based private life insurance company was jolted when his employer asked him to refund a part of the commission he earned by selling life insurance policies. He learnt later that one of his customers was not paying premium and according to his employment contract, he is liable to refund the insurance company a part of the commission he received against this policy. "I was at a loss and did not know what to do. They have asked me to return the money I received as commission against this policy," the agent said, admitting that he did not read his service contract carefully when he joined the insurer. Private life insurers say they have started this practice to improve the persistency ratio of their agents and arrest lapses in insurance policies. Technically, insurers call it the "clawback clause", which allows them to recover a part or all of the commission paid to agents if the policy is cancelled within a given period.

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