Insurance regulator IRDA has asked life insurers to make public the commission they pay to agents for unit-linked products from investors’ money, absence of which has been decried by mutual funds as a disadvantage.
"...it has been decided to disclose the commission or brokerage payable to an agent or broker explicitly...from enhanced transparency view point," the Insurance Regulatory and Development Authority (IRDA) said in a circular.
The move comes at a time when IRDA is engaged in a public and legal battle with market regulator Sebi over who controls unit-linked products.

Insurance companies, by and large, welcomed the decision saying the new rule, effective from July one this year, will bring about more transparency by providing prospective policy holders clear information about the amount that has been collected from them as brokerage or commission.
Mutual Fund industry watchers said now it is up to the investors to decide which product to choose from.
Axis Mutual Fund Managing Director Rajiv Anand said, "Talking about mutual funds we have got complete transparency when it comes to the cost or purchase of a mutual fund product. Now it's up to the consumers to choose from various products in the market." Insurance industry experts said the IRDA move will enable investors to better assess various products.

Commenting on IRDA's move, Metlife India Insurance company Managing Director Rajesh Relan said, "It is essential that investors are fully aware of the key components of the product pricing, which includes mortality charges and the commission."
"We are maturing as an industry and IRDA's decision will further help establish insurance products as a viable long-term investment option," he said.

The IRDA-Sebi turf war was triggered, apparently after the Mutual Funds industry complained to Sebi that huge commissions paid by ULIPs to agents put them at a disadvantageous position. Agents push ULIPs, rather than MFs as they get huge commission from these insurance products.
Sebi had banned entry load paid by investors while purchasing mutual funds schemes. These funds earlier used to pay commission to agents from the entry load.

The ban on entry load virtually dried-up the source of commission for mutual fund agents, forcing them to shift to selling ULIPs.
However, IRDA too had earlier capped the commission charges on fund management between 2.25 per cent to three per cent of earnings from these schemes.
About 7.03 crore Ulip polices involving a total premium of Rs 90,645 crores were in force in 2008-09. As many as 16.7 lakh policies were sold with a premium of Rs 44,611 crores during April-February 2009-10.