ABSLI Policy on Payment of Commission (Current Version)

Payment of Commission to Insurance Agents and Intermediaries'

Version Control

Version	Month	Approved by	Remarks
Version 1.0	March 2017	Board of Directors	As per IRDAI (Payment of commission or remuneration or reward to insurance agents and insurance intermediaries) Regulations, 2016.
Version 1.1	January 2018	Board of Directors	As per IRDAI (Payment of commission or remuneration or reward to insurance agents and insurance intermediaries) Regulations, 2016.
Version 1.2	January 2019	Board of Directors	As per IRDAI (Payment of commission or remuneration or reward to insurance agents and insurance intermediaries) Regulations, 2016.
Version 1.3	October 2019	Board of Directors	As per IRDAI (Payment of commission or remuneration or reward to insurance agents and insurance intermediaries) Regulations, 2016.
Version 1.4	April 2020	Board of Directors	As per IRDAI (Payment of commission or remuneration or reward to insurance agents and insurance intermediaries) Regulations, 2016 & IRDAI Circular ref: IRDAI/INT/CIR/MISC/080/04/2020 on Board Approved Policy for payment of Rewards - FY 2020-21 onwards.
Version 1.5	July 2020	Board of Directors	Differential commission to agents, within the overall regulatory limits.
Version 1.6	April 2021	Board of Directors	Annual Review of the Policy.
Version 1.7	April 2022	Board of Directors	Annual Review of the Policy.
Version 1.8	April 2023	Board of Directors	In line with the IRDAI (Payment of Commission) Regulations, 2023 & IRDAI Circular ref: IRDAI/INT/CIR/MISC/82/3/2023 on Guidance Note - Board Policy of the insurer on the commission structure.
Version 2.0	April 2024	Board of Directors	In line with the IRDAI (Expenses of Management, including Commission, of Insurers) Regulations, 2024.
Version 2.1	April 2025	Board of Directors	In line with the IRDAI (Expenses of Management, including Commission, of Insurers) Regulations, 2024.
Version 2.2	April 2026	Board of Directors	In line with the IRDAI (Expenses of Management, including Commission, of Insurers) Regulations, 2024.

Index

Sr. No.	Particulars
A	INTRODUCTION
B	AIMS AND OBJECTIVE OF POLICY
C	APPLICABILITY AND SCOPE
D	DEFINITIONS
E	MANNER AND CONDITIONS REGARDING PAYMENT OF COMMISSION TO AGENTS AND INSURANCE INTERMEDIARIES
F	TRANSFER OF ORPHAN POLICIES
G	ACTION TO BE TAKEN IN CASE OF MARKET CONDUCT ISSUES
H	RESTRICTIONS ON TYPES OF PRODUCTS TO BE SOLD
I	MANNER AND CRITERIA FOR DETERMINING COMMISSION PAYABLE
J	FILING OF ANNUAL RETURN
K	REVIEW PROCESS

A. INTRODUCTION

Insurance Regulatory & Development Authority of India (“hereinafter referred as “IRDAI”) has released IRDAI (Expenses of Management, including Commission, of Insurers) Regulations, 2024(“hereinafter referred as “Regulations”) dated January 22, 2024 bearing ref no.F.No IRDAI/Reg/2/196/2024 The Regulations have mandated Insurer to frame a Policy on “Payment of commission to insurance agents and insurance intermediary Policy” (hereinafter referred as “The Policy”).

This Policy shall be read in conjunction with the Agent Recruitment Policy and such other policies as is applicable to the insurance agent or insurance intermediaries related to payment of commission of Aditya Birla Sun Life Insurance Company Limited (“the Company).

B. AIMS AND OBJECTIVES OF THE POLICY

The policy sets out the framework and guidelines on payment of commission to insurance agents and insurance intermediaries to promote fair and transparent competition among intermediaries, aligning incentives with customer needs and encouraging efficient and cost-effective distribution. The Policy does not detail the Company’s processes for the day-to-day management of commission to agents and intermediaries.

The structure of Commissions would encourage better performance from the agents and intermediaries. The policy aims at using the distribution channels in the most efficient and effective manner to achieve the below objectives:

• Protect the interests of the policyholders.
• Increase insurance penetration and density in the country.
• Expense on account of commission is commensurate with regulatory guidelines and the business strategy;
• Brings cost efficiencies in the conduct of business and simplification of the administration of insurance business and
• Gives an indication on the relative degree of importance placed on qualitative quantitative parameters

C. APPLICABILITY & SCOPE

This policy shall provide for the framework for payment of commission to insurance agents and insurance intermediaries as defined in the Insurance Act, 1938, IRDA Act, 1999 and Regulations issued there under as amended from time to time.

The Policy covers the following:

1. Manner and conditions regarding payment of:

• First year /Renewal commission to the insurance agents and insurance intermediaries respectively,
• Renewal commission, if any, to insurance agents after termination of agency,
• Hereditary commission to the heirs of an insurance agent in the event of the death of the insurance agent
  

2. Manner and conditions regarding transfer of orphan policies

3. Grounds and manner of termination, suspension and cancellation of appointment of Insurance agents and insurance intermediaries

4. Any restrictions on the products to be sold by any of insurance agents and insurance intermediaries.

Note:- Where the policies are procured directly by ABSLI, no commission shall be payable either to insurance agents or to the insurance intermediaries. Further, ABSLI will not pay both commissions to an insurance agent and remuneration to an insurance intermediary on the same insurance policy.

The Policy shall not be applicable to products solicited IRDAI (Insurance Services by Common Service Centre) Regulations 2015. The revised commission structure will not apply to already sold policies prior to April 01,2023.

D. DEFINITIONS

Commission” means any compensation including remuneration, or reward, by whatever name called, paid by an insurer to Insurance agent, Intermediary or Insurance intermediary, as applicable, for soliciting or procuring or transacting insurance business

“Insurance agents” mean the individual insurance agents engaged by the Company

“Insurance intermediaries” means and includes
✓ Corporate Agents
✓ Insurance Brokers
✓ Web Aggregators
✓ Insurance Marketing Firm
✓ Any other entity as may be notified by the Authority from time to time

“Point of Sales Person” (POSP) means individual (POSP) appointed by the Authority

E. MANNER AND CONDITIONS REGARDING PAYMENT OF COMMISSION TO AGENTS AND INSURANCE INTERMEDIARIES

Commission or remuneration shall not be higher than the maximum limits as specified in the Expense of Management (EOM) limits specified under Insurance Regulatory and Development Authority of India (Expenses of Management, including Commission, of Insurers) Regulations, 2024 or that approved under Insurance Regulatory and Development Authority of India (Insurance Products) Regulations, 2024

The Board authorise the MD & CEO, along with CFO and Appointed Actuary, to decide or modify or differentiate the Commission or remuneration payable to insurance agents or to insurance intermediaries within the overall IRDAI permissible limits. and based on proposal from the CDO in this regard.

The policy would be reviewed at periodic intervals especially with events evolving during the year. Further, a periodic update on commission paid across channels would be presented to the Board.

The differential commission to agents would be basis parameters like quality of business, vintage, quantitative performance of new business, persistency, policy term, premium payment term of the polices sold etc as approved by the MD & CEO, within overall permissible limits.

The Payment of renewal commission to insurance agents after termination/ cancellation or hereditary commission to the heirs of an insurance agent in the event of the death shall be as per the Insurance Agent recruitment policy.

The intermediary and POSP would be eligible to be paid renewal commission after the termination/cancellation of their license or expiry of an agreement, except where the termination is for reasons of fraud, provided such intermediary has worked with ABSLI for at least five years or in case of specific scenarios as approved by the MD & CEO.

Any change in the above-mentioned payment norms would require prior approval of the MD & CEO.

F. TRANSFER OF ORPHAN POLICIES

An “orphan” policy is a status where the sourcing agent or intermediary who have sourced the policy are no longer active i.e. licensed with ABSLI. In the policyholders’ interest and to provide reach of distribution to them, the Company may decide manner and conditions regarding transfer of these policies to another insurance agent or intermediary.

The Board authorizes the MD & CEO to decide the manner and conditions to transfer and service these policies based on policy.proposed by the CDO in this regard.

ABSLI may pay such fee/commission as may be permitted by Authority from time to time. ABSLI shall put in place the required guidelines and procedures to manage and transfer the Orphan policies including retransfer.

G. ACTION TO BE TAKEN INCASE OF MARKET CONDUCT ISSUES

ABSLI shall ensure the Insurance agents & Intermediaries adhere to high standards of behavior & ethical practices. ABSLI after giving due opportunity of being heard, may initiate actions including termination/suspension and cancellation of appointment of Individual Agents, POSP and Insurance Intermediaries on the ground like violation of any IRDAI Regulations/ Guidelines, breach of code of conduct, act of mis-selling or fraud, nonadherence to terms and conditions of their appointment letter and agreement etc.

H. RESTRICTIONS ON TYPES OF PRODUCTS TO BESOLD

The Board authorizes MD & CEO along with Appointed Actuary , CDO to decide the type of products which can be sold by any of the Insurance Agent and Insurance Intermediary.

I. MANNER AND CRITERIA FOR DETERMINING COMMISSION PAYABLE

The Company shall pay commission which is commensurate with the efforts of its agents and intermediaries to reward them for their performance and/or protect their association with the Company.

The criteria for such business promotion schemes and campaigns will be decided by the Company basis various quantitative/qualitative parameters. An indicative list is as below:

Sr. No.	Name of the Parameter	Rationale for Inclusion of the Parameter
1	First Year Premium	Helps in meeting the New Business Targets (Premium Value/Volume) earned by the Company.
2	Quality of Business viz. Persistency / Customer Complaints / Early Claims	This would encourage good distribution practices and enhance customer satisfaction.
3	Policy Term / Premium Payment Term	This would ensure focus on promotion of long-term nature of insurance contracts and retention of customers.
4	Composition of Business / Product Mix	These parameters may be relevant to drive business objectives of the Company.
5	Any other qualitative/quantitative parameters such as vintage of the agent/intermediary, adherence to Sales Code of Conduct, training, etc.	These parameters may be relevant to drive business objectives of the Company from time to time.

Further considering Insurance business and agent’s/intermediaries’ performance are subject to various market factors which are dynamic in nature, CEO & CFO shall lay down operating guidelines.

The Incentive commission shall be paid to the agents, intermediaries and insurance intermediaries as per the schemes proposed by the CDO and approved by the CEO and CFO.

The Board shall have effective oversight of implementation of this Policy. Adherence & Performance of the commission structure shall be regularly reported to the Board

J. FILING OF ANNUAL RETURN

ABSLI will file within 45 days of the expiration of each financial year returns on payment of commission as specified after due review by the Audit Committee and Board approval.

K. REVIEW PROCESS

The Company shall establish a standard review process for the commission structure which includes assessments off its effectiveness, efficiency, impact on premium rates, benefit payouts, penetration, alignment with customer needs and interests etc. The review shall be conducted by the audit committee at least on an annual basis.

Further this policy will be reviewed on an annual basis or as and when required based on regulatory amendments. Notwithstanding the foregoing, this Policy may be modified, with the consent of the Board prior to any such annual review.

Any amendment in the policy shall be made with the recommendation of MD & CEO and would be placed to the consequent Board Meeting for approval/ratification. Post which the same shall be filed with the Authority within 30 days of such approval.

Annexure-1- Extract of Operating Guidelines

This disclosure is being made in accordance with IRDAI Master Circular on Corporate Governance for Insurers, 2024 amended vide IRDAI circular on Remuneration to Key Management Persons (KMPs) dated 25th May 2026 to provide transparency on commission structures applicable to the distribution of life insurance products.

Commission with rewards for FY-25-26

Paying Term	Non-Par	Par	Protection	ULIP	Annuity	Average PPT wise (all segment of business)
Single	3%	NA	4%	3%	2%	2%
2-3	23%	NA	21%	NA	20%	20%
5	44%	NA	45%	20%	25%	23%
6-9	44%	48%	45%	27%	26%	41%
10	45%	47%	42%	25%	24%	33%
11-12	43%	47%	34%	27%	NA	44%
13-14	NA	30%	27%	21%	NA	26%
15	NA	41%	30%	12%	NA	30%
Total	44%	47%	39%	23%	24%	31.6%

Note: The above values are include commission and rewards paid to the agent/intermediaries for the retail business.