Insurance agents flag high hospital bills, inflated motor repair costs for rising premiums

Agents Challenge Premium Narrative

The Confederation of General Insurance Agents Associations of India (CGIAAI), representing around 1.6 million individual general insurance agents, has written to Prime Minister Narendra Modi arguing that steep hospital bills and inflated motor repair charges, not agent commissions, are pushing up general insurance premiums. The association points to an incurred claims ratio of 84% to 87% across the industry as the main cost driver, and says hospitals often bill insured patients more than cash-paying ones for similar treatment, while automobile workshops inflate estimates when claims are routed through insurers. It wants the government and IRDAI to standardise hospital tariffs and workshop repair bills directly.

Why It Matters For Business

The representation comes as IRDAI weighs tighter expense-of-management caps, proposed at 25% within two years and 20% within five years. CGIAAI warns these could strain public sector and mid-sized general insurers, force branch closures in semi-urban and rural areas, concentrate the market among a few large private players and reduce consumer choice. It notes individual agents earn roughly 12% to 13% commission on average while absorbing significant operating costs, particularly in smaller towns. The association also flags conflict-of-interest risks if hospitals and garages are permitted to sell insurance, and seeks limits on aggressive bancassurance cross-selling, arguing banks should restrict such sales to credit-linked risk protection. For insurers, intermediaries and compliance teams, the submission signals that distribution economics and claim-cost inflation are now being contested together in the same regulatory conversation.

Demands And Next Steps

CGIAAI has asked for a statutory minimum retail agent commission equal to 75% of the prescribed ceiling, a baseline fee of Rs 250 per retail or motor policy, and access to digital platforms such as Bima Sugam for onboarding, renewals and serv…