IRDAI Powers Against Insurance Mis-selling: Bima Amendment Bill
Why in the news
Parliament cleared a bill that hands IRDAI broader statutory power to stop insurance mis-selling.
Objectives
- Protect policyholders and make commission disclosure transparent.
- Reduce conflicts of interest in distribution, especially bancassurance.
New powers
| Area | Provision |
|---|---|
| Commissions (Clause 36, Section 40 of the Insurance Act, 1938) | IRDAI can limit commissions, set how they are paid and require disclosure of embedded commissions to buyers |
| Conflicts (Clause 25, Section 32A) | Insurer directors or officers cannot hold similar posts in banking or investment companies |
| Intermediaries (Section 42D) | Brokers, web aggregators and corporate agents face fit-and-proper tests; registrations can be suspended or cancelled |
| New Section 40(2A) | Wide rule-making over agents and intermediaries on commissions, disclosures and conflicts |
Significance
- Banks are the largest corporate agents for insurance, so the ban limits board-level influence over product pushing.
- Moves pricing from opaque to informed consumer choice.