The Authority has examined the recommendations made in the "Report of The Expert Committee to Examine the Remuneration System for Insurance Brokers and Insurance Agents in General Insurance Business" and issue the following orders in respect of:

a) Special discount in lieu of Agency Commission / Broker's Remuneration, and
b) The structure of Agency Commission / Brokers Remuneration in respect of Tariff business of Fire, Petrochemical, Engineering, CL(Fire), MLOP, IAR, Motor, Statutory insurances and Non Tariff business.

1. A special discount of 5% in lieu of Agency Commission / Broker's Remuneration is now available for companies with a paid up capital above Rs. 10 lakhs. As the present limit was fixed more than three decades ago, the eligibility limits for special discount now stands raised from Rs. 10 lakhs to Rs. 3 crores without any distinction between public and private sector. However, in respect of Government Departments where paid up capital cannot be determined the facility of 5% Special Discount in lieu of Agency Commission / Broker's Remuneration shall continue.

Companies or firms, whether Private Limited Companies or Public Sector undertakings or statutory bodies having a paid up capital above Rs. 3 croresshall henceforth have the option of either:

(i) availing a 5% Special Discount and place the Tariff business of Fire, Petrochemical, Engineering, CL(Fire), MLOP and IAR directly with an insurer; or

(ii) seek the services of an Insurance Broker / Insurance Agent when they will become ineligible for the 5% Special Discount.

2. The scale of Agency Commission/ Brokers Remuneration shall be regulated as per the table given below:

No.	Class of Risk	Paid up capital	Agency Commission (% of final premium excluding service tax)	Direct Brokers Remuneration (% of final premium excluding service tax)
1	Tariff business of Fire, Petro-chemical, Engineering, CL(Fire) MLOP and IAR insurances	Individuals	10%	12.5%
		Paid up capital upto  Rs. 3 crores	Upto 10 %	Upto 12.5%
		Paid up capital above  Rs. 3 crores to Rs. 25 crores	Upto 6.25%	Upto 7.5%
		Paid up capital above  Rs. 25 crores	Upto 5%	Upto 6.25%
No.	Class of Risk		Agency Commission (% of final premium excluding service tax)	Direct Brokers Remuneration (% of final premium excluding service tax)
2.	Indian Motor Tariff and Statutory Insurances (Workmen’s Compensation act, 1923; Motor Vehicles Act, 1988; Public Liability Insurance Act, 1991)		Upto 10 %	Upto 10%
3	All Non Tariff  Business		Upto 15%	Upto 17.5%

3. It is also clarified that:

a) Special Discount in lieu of Agency Commission/ Brokers Remuneration shall be restricted only to Tariff business Fire, Petrochemical, Engineering, CL(Fire), MLOP and IAR.

b) In all cases where the insured is availing special discount in lieu of Agency Commission/ Broker's Remuneration, the same should be indicated on the face of the policy.

c) The percentage of special discount in lieu of Agency Commission/ Brokers Remuneration, Agency Commission, and Brokers Remuneration specified above be applied on the final premium excluding service tax.

d) For the purpose of evidence of paid up capital a copy of the latest Balance Sheet which is in public domain as per the requirements of the Companies Act, 1956 should be acceptable. In case of a balance sheet which is 2 years prior to the relevant year of placing insurance an auditor's certificate must be produced. In case of sole proprietorship and partnership firms a certificate from a Chartered Accountant to the client should be acceptable.

e) In respect of branches in India of a foreign company reference should be drawn from the paid up capital of the company in the country in which it is incorporated and thereafter converting it into Indian Rupees.

f) The above orders come in to effect from April 01, 2004 shall be valid for a period of one year.

4. For Marine Hull Tariff business the existing scale of remuneration shall continue until further orders.

5. The Authority will examine the recommendations made by the Expert Committee on other matters and shall take a final decision in due course of time



C.S. Rao
Chairman