Archive · 24 Sep 2026
IRDAI proposes commission clawbacks for insurance mis-selling reforms
India’s insurance regulator has proposed new rules to reduce misleading sales.
If an insurance seller is found to have mis-sold a policy, the seller’s commission could be taken back.
The salesperson’s identity could be connected to the policy sold.
Information about mis-selling could also be placed in a public insurance database.
Insurers may have to show that larger life-insurance policies suit the customer’s needs.
Signing a policy would not automatically excuse an unsuitable sale.
Mis-selling could include hiding surrender penalties or presenting insurance as a guaranteed-return investment.
The proposals would also limit sales rewards that might encourage people to sell unsuitable policies.
IRDAI has proposed clawing back commissions when insurance mis-selling is established.
Salespersons, agents and distribution representatives could be linked to the policies they sell.
Mis-selling records could be made publicly available through the Public Insurance Registry.
Insurers may need to document customer needs and product suitability for larger life-insurance sales.
The proposals would restrict volume-based incentives and cover monetary and non-monetary remuneration.
- Who
- The Insurance Regulatory and Development Authority of India, insurers, insurance agents and other sales representatives.
- What
- IRDAI has proposed reforms including commission clawbacks for established mis-selling, salesperson identification and stronger suitability requirements.
- When
- The proposals are contained in IRDAI’s consultation paper on insurance distribution reforms.
- Where
- India’s insurance market.
- Why
- To make insurance sales more accountable and protect customers from unsuitable or misleading recommendations.
- Regulator
- Insurance Regulatory and Development Authority of India (IRDAI)
- Proposed penalty
- Insurers would claw back commissions when mis-selling is established.
- Salesperson tracking
- Specified persons, salespersons, PoSPs, agents and insurer associates could be tagged to policies they sell.
- Public disclosure
- Mis-selling instances could be made available through the Public Insurance Registry.
- Suitability records
- For life-insurance sales above a defined ticket size, insurers would document customer needs, suitability and an audit trail.
- Examples of mis-selling
- Examples include disguising regular-premium policies as single-premium products and presenting insurance as fixed deposits or high-return investments.
- Incentive restrictions
- Volume-linked or reward-linked incentives for bank and NBFC staff could be prohibited.