Health cover hurdle for elderly

PSU Insurers Cap Commission On Plans Sold To 55-Plus At 5% Mumbai: The elderly will find it hard to buy health insurance with the public sector insurers bringing down agent commissions by more than a third for policies sold to those over 55. Companies with high claims, too, will find it difficult to get agents to service them as group policies where claims exceed premium will not be eligible for commission.      The new commission structure that is effective from this month and is aimed at curbing losses of public sector general insurance companies — National Insurance, New India Assurance, Oriental Insurance and United India Insurance. Under the new guidelines, insurance companies will pay full commission (15%) for policies sold to those below 35 years. For individuals in the 35-55 age group, the commission stands reduced to 10% while for those above 55 the commission has been capped at 5%. Motor insurance commissions have also been capped at 10%.      An industry official said the revised commission structure is aimed at discouraging adverse selection as claims are highest in the 55-plus category and it is this age group that is proactive in buying health cover. Insurers say that while they still make money on policies sold to younger people, the older segment, despite paying more than double the premium of those in 20s, has always been a loss making one.      According to Sanjay Parekh, vice-president, General Insurance Agents Association, some companies have discontinued commissions on policies sold to senior citizens. "Agents will not be able to provide service to policyholders and this will result in lapsation of policies," he said. The directive on commissions strikes a big blow to distributors of financial products, coming close on the heels of the central government's decision to cut commissions on small savings and mutual funds doing away with payments to distributors after Sebi placed curbs on entry loads. Even life insurance agents have been hit with companies reducing commissions after the insurance regulator directed them to bring down charges. Incidentally, both the life industry and the mutual fund business have seen a slowdown after commissions came down.      The agents' association has called for a meeting on September 5 to protest against this move. Agents say that in any case the move may be deferred.  NEW PAYOUTS ON POLICIES SOLD…  To under 35 category: 15% To 35-55 age group: 10% To 55-plus category: 5% Motor policies: 10% Group polices to be hit  There will be no commission on group polices sold to companies where claims exceed premium