2 hrs ago
Insurance Brokers Warn Irdai Reforms Could Hurt Jobs and Growth
India’s insurance regulator, Irdai, wants to change how insurance is sold.
It has proposed limits on the commissions paid to insurance distributors.
It also wants insurers to reduce the amount they spend on running their businesses.
The Insurance Brokers Association of India says these changes could make it harder to sell and service policies.
The group warns that companies might reduce sales, servicing, and claims staff.
It also says many self-employed workers in smaller towns could lose income.
Irdai says its goals include protecting customers, reducing misleading sales, and expanding insurance coverage.
The brokers want the regulator to change parts of the proposal before adopting it.
The Insurance Brokers Association of India opposed Irdai’s proposed distribution reforms.
The proposals would introduce more than 30 commission caps across products and channels.
IBAI warned that lower commissions and expense limits could reduce staffing and distribution reach.
The association said reforms could affect 14.81 lakh point-of-sale persons and 16,230 motor insurance service providers.
IBAI plans to submit a detailed response to Irdai by October 25.
- Who
- The Insurance Brokers Association of India and the Insurance Regulatory and Development Authority of India.
- What
- IBAI warned that Irdai’s proposed commission caps and expense-limit reductions could hurt policyholders, jobs, and insurance growth.
- Where
- India’s insurance market, including smaller Tier-2 and Tier-3 towns.
- When
- Irdai released the proposal last week, and IBAI issued its response on Tuesday.
- Why
- Irdai aims to protect policyholders, improve transparency, curb misselling, and expand insurance coverage; IBAI says the proposed measures could reduce distribution and servicing.
Insurance Brokers’ Concerns
Regulatory Reform Objectives
Commission and expense limits
Insurance Brokers’ Concerns
IBAI says more than 30 commission caps and a major reduction in expense limits could make sales and servicing uneconomical, especially for customers in smaller towns.
Regulatory Reform Objectives
Irdai’s proposal seeks product- and channel-based commission limits and lower expenses as part of a broader distribution overhaul.
Policyholder protection
Insurance Brokers’ Concerns
IBAI supports policyholder protection but says the proposed structure could reduce distribution, staffing, and claims servicing, without guaranteeing that savings reach customers through lower premiums.
Regulatory Reform Objectives
Irdai has stated that the reforms are intended to improve policyholder protection and transparency and curb misselling.
Insurance expansion
Insurance Brokers’ Concerns
IBAI says reduced commissions could limit access for customers served by self-employed distributors in Tier-2 and Tier-3 towns, potentially undermining the Insurance for All by 2047 agenda.
Regulatory Reform Objectives
The proposed reforms are presented as part of efforts to widen insurance coverage and improve the functioning of insurance distribution.
Key facts
- Commission caps
- Irdai proposed more than 30 separate caps based on product, channel, complexity, and servicing effort.
- Life insurer expense limit
- The proposed limit would fall to 15% within two years and 12.5% within five years, from 30%-35%.
- General insurer expense limit
- The proposed limit would decline from 30% to 20% over five years.
- Point-of-sale persons
- Insurance brokers sponsored 14.81 lakh of India’s 27.18 lakh point-of-sale persons as of March 31, 2025.
- Motor service providers
- Brokers sponsored 16,230 of India’s 26,316 motor insurance service providers as of March 31, 2025.
- IBAI deadline
- The association said it will submit its detailed response to Irdai by October 25.
Quotes
Insurance Brokers Association of India
Apex representative body of India’s licensed insurance brokers
“An expense limit reduced by over 30% within five years cannot be met by efficiency alone; insurance companies will land up reducing sales, servicing and claims staff at private and public sector insurers alike.”
financialexpress.com
IBAI spokesperson
Spokesperson for the Insurance Brokers Association of India
“Commission caps where the intermediary earns below the cost of serving these customers will end reach to these customers, defeating the very objective of this reform.”
financialexpress.com
Sources
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