Chennai, Feb 5 (IANS) The Kerala government’s gazette notification on minimum wages for employees of private financial institutions has put the insurance companies in a spot, said a senior industry official.
The notification has prescribed minimum wages for the insurance agents, promoters and advisors.
The Kerala government has prescribed a minimum scale of pay of Rs 14,750 for the insurance promoters, agents and advisors. It has prescribed various wages for different categiories of employees in private financial institutions.
The gazettee notification was made by the Kerala government last month.
“Basically, an agent is not an employee of an insurer. The relationship between the two are that of a Principal and Agent and not employer and employee,” the official not wanting to be quoted told IANS.
Further, as per the Insurance Regulatory and Development Authority of India’s (IRDAI) guideline, a person can be an agent for three insurers-life, non-life and health.
“Can he claim minimum wages from the three companies,” industry officials wondered.
According to industry officials, if the law is implemented, then the agent cost structure will increase drastically, which in turn would impact the agency channel.
Presently, insurers pay an insurance agent a percentage on the premium procured by him as a commission.
The notification is applicable to the banks, micro-financing institutions, non-banking finance companies and others.