Archive · 25 Sep 2026
IRDAI Proposes Digital Motor Insurance Options for New Cars
India’s insurance regulator wants to change how people buy insurance with a new car.
Dealers may have to show buyers a digital way to purchase insurance, possibly using a QR code.
The digital option could connect customers to platforms such as Bima Sugam.
Dealers would have to follow new rules if they continue selling insurance.
Some dealers may need to register as Insurance Distribution Entities, while others could work with an insurance distributor or one insurer.
The regulator also wants to reduce payments for certain easy-to-sell policies.
Customers should still be able to use cashless repairs even if they buy insurance somewhere else.
These ideas are proposals and are not final rules yet.
IRDAI has proposed prominently displaying a digital motor-insurance option, including a QR code, for new-car buyers.
The regulator said motor-insurance premiums grew about 34% from FY23 to FY25, while commissions rose about 259%.
IRDAI has proposed zero commission for mandatory third-party cover and a 5% cap for own-damage and related new-vehicle covers.
Dealers selling insurance would need to register as Insurance Distribution Entities, join one as Points of Sales Persons, or associate with a single insurer.
Dealers could not deny cashless repairs solely because a customer bought insurance from another distributor.
- Who
- The Insurance Regulatory and Development Authority of India, motor dealers, insurers, OEM brokers, Motor Insurance Service Providers, and vehicle buyers are involved.
- What
- IRDAI has proposed reforms covering digital insurance sales, dealer structures, commissions, and access to cashless repairs.
- When
- The proposals relate to FY23-FY25 data and future implementation; the articles do not provide an implementation date.
- Where
- The reforms would apply to motor-insurance distribution in India, including digital platforms such as Bima Sugam.
- Why
- IRDAI says the proposals address rising commissions, distribution structures, customer choice, and the economics of motor-insurance distribution.
Consumer Choice and Transparency
Dealer Income and Implementation Concerns
Digital insurance purchasing
Consumer Choice and Transparency
A prominently displayed digital option through platforms such as Bima Sugam could give buyers a clearer alternative to dealership insurance and increase choice.
Dealer Income and Implementation Concerns
A shift away from dealer-led sales could disrupt the existing process linking vehicle purchases, financing, insurance, and servicing.
Commission reductions
Consumer Choice and Transparency
Lower or zero commissions on certain new-vehicle policies could reduce distribution costs and address the sharp rise in commissions relative to premiums.
Dealer Income and Implementation Concerns
Dealers, OEM-linked brokers, and other distributors could face lower income, requiring existing commercial arrangements to be revisited.
Cashless repair access
Consumer Choice and Transparency
Customers would be able to buy insurance elsewhere without being denied cashless repairs solely for that reason, subject to final rules and policy terms.
Dealer Income and Implementation Concerns
The practical effect on product availability and seamless customer service would need careful examination, particularly for smaller dealers operating through new distribution arrangements.
- Premium growth
- Motor-insurance premiums grew about 34% between FY23 and FY25.
- Commission growth
- Motor-insurance commissions increased about 259% between FY23 and FY25.
- Average commission
- The average motor-insurance commission was about 24% in FY25, with rates varying across products and channels.
- Dealer-channel premiums
- OEM brokers and Motor Insurance Service Providers generated about ₹29,000 crore in premiums in FY25.
- Dealer-channel commissions
- OEM brokers and Motor Insurance Service Providers received nearly ₹7,050 crore in commissions in FY25.
- Proposed new-vehicle limits
- The proposal would set remuneration at nil for mandatory third-party cover and 5% for own-damage and related covers for new vehicles.
- Digital platform fee
- For not-for-profit platforms established by all or a group of insurers, the proposed fee cap is 5% of premium.
