2 hrs ago
Insurance Brokers Warn IRDAI Reforms Could Slash Revenue
India’s insurance regulator has proposed new rules about how much insurers can spend and pay in commissions.
The Insurance Brokers Association of India says the changes could sharply reduce brokers’ income.
It warns that many jobs could be affected, though estimates mentioned in the report differ.
The association says higher recorded commissions partly came from changing how some marketing costs were counted.
It also says insurers’ operating expenses are below the proposed limit.
The regulator’s proposal is intended to address concerns about commissions and expenses.
Brokers say they support action against misselling but worry the rules could hurt small businesses and make it harder to serve some customers.
They have asked for more time to respond to the proposal.
The Insurance Brokers Association of India says proposed IRDAI rules could cut broking-sector revenue by 60–70%.
The association warned that up to 10 lakh jobs across insurance distribution could be lost; another broker cited more than 1 lakh jobs affected.
IRDAI has proposed restoring product-wise commission caps and tightening limits on insurers’ overall expenses, citing concerns about rising commissions.
IBAI disputes the regulator’s commission data, saying increases partly reflect reclassified marketing expenses, and says industry operating expenses average about 26.5% of gross premiums.
IBAI supports addressing misselling and disproportionate remuneration but seeks more time to comment, proposing a December-end deadline instead of October 25.
- Who
- The Insurance Brokers Association of India and insurance distributors, responding to proposed rules from the Insurance Regulatory and Development Authority of India.
- What
- IBAI warned that proposed commission caps and expense limits could sharply reduce broking revenue and affect jobs.
- Where
- India.
- When
- The proposals were recently announced; the current feedback deadline is October 25, and IBAI has requested an extension to December-end.
- Why
- IRDAI cited concerns about disproportionate increases in commissions paid to distributors; brokers say the changes could harm businesses and insurance services.
Insurance Brokers Association of India
Insurance Regulatory and Development Authority of India
Commission and expense rules
Insurance Brokers Association of India
IBAI says the proposed changes risk a 60–70% revenue collapse and could threaten small businesses and jobs. It argues the recorded commission increase partly reflects the reclassification of marketing expenses.
Insurance Regulatory and Development Authority of India
IRDAI has proposed product-wise commission caps and tighter expense limits, citing concerns about disproportionate increases in commissions paid to distributors.
Impact on policyholders
Insurance Brokers Association of India
IBAI warns that job losses could weaken insurance awareness, renewals, policyholder assistance, and coverage among underserved communities.
Insurance Regulatory and Development Authority of India
The regulator’s stated goal, as described by IBAI, is to make insurance more affordable and accessible.
Key facts
- Potential broking revenue impact
- IBAI projects a 60–70% revenue collapse across the insurance broking sector.
- Employment estimates
- IBAI warned of up to 10 lakh jobs lost across insurance distribution; Quickinsure’s founder projected more than 1 lakh jobs affected.
- Current feedback deadline
- October 25; IBAI has asked to extend it to December-end.
- Proposed measures
- Reintroduce product-wise commission caps for distributors and impose tighter limits on insurers’ overall expenses.
- Reported operating expenses
- IBAI said general insurance operating expenses averaged about 26.5% of gross premiums, compared with a mandated limit of 30%.
- Claim payouts
- IBAI said non-life policyholders received ₹84.4 in claims for every ₹100 of premium over a five-year period.
- Regulator’s commission figures
- IRDAI data cited in the article showed broker-sourced general insurance premiums rising 37% and commission payouts rising 173% between FY23 and FY27; IBAI disputed the interpretation.
Sources
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