THIRUVANANTHAPURAM: When the ‘Bima Sugam’ portal is launched to bring all the insurance services under one umbrella, under the control of private insurance companies, it will lead to the slashing of the agency commission. This will affect the more than 50 lakhs insurance agents. There are about 4 lakhs agents in Kerala itself.

The Bima Sugam portal will be launched on January 1st.

In the recommendation submitted Insurance Regulatory and Development Authority to the central government, the cost of conducting insurance will come down from 45% to 20-30%. This cost includes agency commission, intermediary expenditure, and reinsurance expenditure. Half of the cost is intermediary expenditure.

When this is reduced, the agents revenue is also reduced. The commission is 6% of the first premium and 15% of yearly premium. The recommendation is that this commission must be reduced to 4% and 10% respectively.

With Bima Sugam, any insurance policy can be availed through online by giving 5% as commission. The company can make profit by reducing the people’s insurance claim and doing unclaimed business. Currently, 80% of the claims are through agents. With Bima Sugam, the consumers can claim directly without the agents. As this is complicated the success rate is low. It is hard to claim by calling toll free number.

The revenue earned from premium by life insurance this year was Rs.77,488 crores and gave agency commission of Rs.14,568 crores. There are 58 insurance companies in the country. LIC is the only government life insurance company.