IRDAI's Bima Sugam digital insurance marketplace is expected to charge insurers a market fee of 5-7% of premium value, according to industry sources. This is dramatically lower than the traditional 30-40% first-year commission paid to agents and brokers, and even below the 15-20% trail commissions on renewal business.
The fee structure positions Bima Sugam as a cost-effective distribution channel, with savings expected to be passed on to consumers through lower premiums. Insurers participating in the September trial run will operate under a zero-commission model initially, with the market fee structure to be finalised before full public rollout.
Industry analysts estimate that if Bima Sugam captures 10% of motor insurance distribution within two years, it could save the industry Rs 3,000-4,000 crore annually in distribution costs.