Agents, the year-end closing date is fast approaching and if some of you find yourself way behind your targets what do you do? Push policies aggressively to customers. But how? Its easy.

Just offer to pay up one or two premiums from your pocket or pay your policyholders a percent of your commission upfront and you can be sure to grab more policies than you ever thought.

If such is the practise you have been following STOP it right away. Big Brother is watching. And if you are unfortunately caught ‘incentivising’ in one of the surprise inspection visits that Insurance Regulatory Development Authority (IRDA) plans to conduct you could be in serious trouble.

Rebating in the insurance industry is a practise worldwide and the situation in India is no different. A number of Life Insurance Corporation (LIC) and non-life agents all these years indulged in rebating heavily and it was not so serious an offence until recently when the insurance regulator took upon itself to put an end to it. Now rebating has been prohibited under section 41 of the Insurance Act, 1938 and any insurer caught indulging in it could end up losing its registration as an insurer.

A practise that was initiated by LIC agents, rebating has become the norm today and is difficult to put an end to, says a private insurer’s agent. And to add to the woes, with the monolith having established itself over a period of time in life insurance its difficult to get business when private insurers do not offer such baits.

Private insurers have been going hammer and tongs to put an end to rebating. Om Kotak Life Insurance is reported to have sacked few agents who offered rebates to policyholders and Birla Sun Life also turned down a policy when the customer demanded ‘incentives’.

While the practise of rebating may be difficult to put an end to, one of the suggestions offered was to spread the commission of agents over a period of 10 years instead of paying around 40 per cent as the first year commission. However, this would perhaps be a disincentive to agents particularly private insurer’s considering the amount of hard work that goes in convincing a prospect especially during the initial stage.

So how can the issue be solved. It is not possible to completely eliminate such ills prevailing in the industry. A few unscrupulous agents will always indulge in these practices which is also the case worldwide inspite of regulations. But it can definitely be minimized either by strict monitoring or by severely penalizing the wrongdoers.