LIC vs agents: 7% commission cut, protests, policy surrender and more
Life Insurance Corp. (LIC), which gets 96% of its new business from its agents, has recently introduced changes that have miffed them. Effective 1 October, modifications to endowment plans include a 7% reduction infirst-year agent commissions to 28%. LIC also plans to introduce a clawback clause, which would require agents to return part of their commission if a policyholder surrenders a policy within five years.
These modifications follow the Insurance Regulatory and Development Authority of India's (Irdai) master circular on life insurance products (Insurance Products Regulations, 2024). Key changes include reducing the entry age to buy an endowment plan to 50 years from 55. The minimum basic sum assured has been increased to ₹2 lakh from ₹1 lakh with an increase in premium rates. Interestingly, the policy will now acquire surrender value at the end of the first year, provided a full one-year premium has been paid. Earlier, it was two years.
The revised agent commissions are a corollary to the modifications in endowment plans. The decision hasn't gone down well with agents. The All India Life Insurance Agents' Federation of India (All India LIAFI) and regional federations plan to start a nationwide protest. They have conducted peaceful demonstrations outside LIC branches.
«The agent commission has remained the same since the launch of the LIC in 1956 to September 2024, while salaries of LIC employees and executives have only been rising. LIC had reduced the commission by nearly 7%, including the bonus payment. We demand that first-year commission remains as is, which is nearly 35% (including bonus),» said Nayan Kumar Kamal, national president of All India LIAFI.
Agents also demand that the second-year commission be
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