Archive · 1 Oct 2026
Insurance reforms frame regulation as costly path to trust
Deepak Shenoy says new rules can sometimes make business harder for existing companies.
He points to changes made after the Harshad Mehta market crisis in the 1990s.
Those changes helped create the National Stock Exchange and expanded the role of SEBI.
Shenoy believes the rules eventually made people more confident in financial markets.
He says insurance is now facing a similar period of change.
IRDAI wants customers to see insurance prices and product information without giving personal details first.
It also wants to limit some commissions and insurer expenses.
Shenoy says these changes may cause short-term problems but could build a more trustworthy insurance market.
Deepak Shenoy says financial-market regulation can hurt incumbents while strengthening long-term investor confidence.
He cites the Harshad Mehta-era crisis as a catalyst for the National Stock Exchange and an expanded SEBI role.
IRDAI has proposed easier access to insurance prices, product details, claims data and grievance information.
Proposals include restrictions on personal-data requirements, lower life-insurance commissions and tighter expense limits.
Shenoy says reforms may pressure profits initially but could improve trust and reduce regulatory arbitrage.
- Who
- Deepak Shenoy, IRDAI, insurers, brokers, corporate agents and other financial-market participants.
- What
- A discussion of proposed insurance reforms and the broader argument that regulation can impose short-term costs while increasing trust.
- When
- The article refers to reforms after the early-1990s crisis, data from FY23 to FY25, and a Shenoy post dated September 30, 2026.
- Where
- India's securities and insurance markets.
- Why
- IRDAI aims to improve customer access to information, strengthen consumer protection and address commission and expense trends.
Case for stronger regulation
Concerns about industry impact
Short-term costs versus long-term trust
Case for stronger regulation
Shenoy argues that reforms can strengthen confidence in financial markets and help investments flourish, even when they hurt existing players.
Concerns about industry impact
Insurers, distributors and other incumbents may face higher costs, lower commissions and near-term pressure on profitability.
Insurance sales incentives
Case for stronger regulation
IRDAI says rapidly rising commissions compared with premiums could shift competition away from price and product quality toward sales incentives.
Concerns about industry impact
The article notes that proposed commission and expense restrictions could negatively affect insurers and distributors, though it does not provide a detailed industry response.
Whether every rule helps investors
Case for stronger regulation
Tighter rules may benefit customers by improving access to comparable information and reducing practices that IRDAI considers potential dark patterns.
Concerns about industry impact
Shenoy says regulation is not automatically beneficial and that rules should be reconsidered when they may actually harm investors.
- Securities-market example
- The National Stock Exchange emerged after problems involving the existing exchange structure and the Harshad Mehta episode.
- Customer information
- IRDAI proposed allowing access to product details and prices without requiring phone numbers, email addresses or identification documents first.
- General-insurance figures
- Between FY23 and FY25, broker-generated premiums rose 37%, while commissions increased 173%.
- Life-insurance figures
- Between FY23 and FY25, premiums generated through corporate agents rose 28%, while commissions increased 125%.
- Proposed expense limits
- The consultation paper proposed ceilings of 12.5% for life insurers and 20% for general insurers.
- Proposed commission change
- IRDAI proposed lower limits on first-year commissions for life insurance.
- Shenoy's position
- He described regulation as a potential cost of building trust, while saying some rules should remain open to reconsideration.