{"id":6464,"date":"2025-10-01T20:00:22","date_gmt":"2025-10-01T14:30:22","guid":{"rendered":"https:\/\/1finance.co.in\/magazine\/?post_type=blog&p=6464"},"modified":"2025-10-29T14:13:52","modified_gmt":"2025-10-29T08:43:52","slug":"related-party-insurance-commissions-of-banks-100-percent-irdai-reveals","status":"publish","type":"blog","link":"https:\/\/1finance.co.in\/1f-dashboard\/blog\/related-party-insurance-commissions-of-banks-100-percent-irdai-reveals\/","title":{"rendered":"Related-party insurance commissions of banks are as much as 100%: IRDAI and company disclosures reveal"},"content":{"rendered":"

A recent review of the Insurance Regulator (IRDAI) and company disclosures revealed that up to 100% of the insurance commissions earned by banks may be derived from selling products of their own affiliated insurance companies. This raises concerns about the potential for mis-selling and conflicts of interest within the sector.<\/span><\/p>\n

Why do banks in India aggressively push insurance?<\/h2>\n

According to 1 Finance Magazine\u2019s report, India\u2019s top 15 banks by market capitalisation collectively earned \u20b921,773 crore in commissions from the sale and marketing of insurance, mutual funds and other financial products in FY24.<\/span><\/p>\n

Commissions made from sale\/marketing of insurance, MFs and other financial products (FY24)<\/b><\/p>\n

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Source: The Mis-selling Menace, 1 Finance Magazine<\/span><\/p>\n

Over the years, banks have increasingly become key players in the insurance market. Banks accounted for 33.1% of new individual life insurance business premiums in FY24, a rise from 15.6% in 2013-14.\u00a0<\/span><\/p>\n

This growth is primarily driven by heavy commissions on insurance products sold by relationship managers (RMs), who are incentivised to push these financial products.<\/span><\/p>\n

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Source: The Mis-selling Menace, 1 Finance Magazine<\/span><\/p>\n

However, the commission structures show that the bulk of these commissions are linked to selling policies from related-party insurers.<\/span><\/p>\n

How do related-party commissions create a conflict of interest for banks?<\/h2>\n

The commissions paid to banks for selling insurance products<\/a>, especially life insurance, are huge. According to our study, 100% of commissions banks earn from selling life insurance products are derived from selling policies of their own affiliated insurance companies.<\/span><\/p>\n

This partnership creates a conflict of interest, as banks may prioritise pushing their own products over others, irrespective of their suitability for the customer.<\/span><\/p>\n

\"\"Source: The Mis-selling Menace, 1 Finance Magazine<\/p>\n

At the same time, 99.1% of the commissions banks earn from mutual fund sales come from their own related-party Asset Management Companies (AMCs), another trend of banks prioritising the sale of in-house financial products to their customers.\u00a0<\/span><\/p>\n

\"\"<\/span>Source: The Mis-selling Menace, 1 Finance Magazine<\/span><\/p>\n

1 Finance has made a documentary highlighting the rampant mis-selling of financial products and its impact on our lives. Watch it here.<\/strong><\/p>\n

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