Archive · 30 Sep 2026
IBAI Warns Irdai Distribution Reforms Could Hurt Insurance Growth
India’s insurance regulator, Irdai, wants to change how insurance companies and brokers are paid.
Its proposal would create more than 30 limits on commissions for selling different kinds of insurance.
It would also reduce how much insurers can spend on running their businesses.
The Insurance Brokers Association of India supports some changes, such as stopping compulsory insurance bundling and punishing proven misselling.
However, the group says the proposed limits could make it too expensive to serve some customers.
It warns that insurers and brokers might cut sales, servicing and claims jobs.
It is especially concerned about self-employed workers and customers in smaller towns.
IBAI will send its detailed response to the regulator by October 25.
The Insurance Brokers Association of India said Irdai’s proposed distribution reforms could hurt policyholders, jobs and insurance growth.
The proposals include more than 30 commission caps based on products, channels, complexity and servicing effort.
IBAI opposed a proposed reduction in insurers’ expense-of-management limits, while supporting measures against misselling and compulsory bundling.
The association warned that lower commissions could reduce distribution, sales, servicing and claims staffing, especially in smaller towns.
IBAI plans to submit a detailed response to Irdai by October 25 and urged narrower caps for coerced-choice sales.
- Who
- The Insurance Brokers Association of India and the Insurance Regulatory and Development Authority of India.
- What
- IBAI warned that proposed commission caps and lower expense limits could harm policyholders, employment and insurance growth.
- When
- Irdai released the consultation paper the previous week, IBAI issued its statement on Tuesday, and it plans to respond by October 25.
- Where
- India’s insurance market, including Tier-2 and Tier-3 towns.
- Why
- Irdai says the reforms aim to improve policyholder protection, transparency, market conduct and insurance coverage; IBAI says the proposed limits could reduce affordable distribution and servicing.
IBAI’s Concerns
Irdai’s Reform Objectives
Commission caps
IBAI’s Concerns
IBAI says applying more than 30 caps across all products and channels could make some customer servicing uneconomical, particularly in smaller towns.
Irdai’s Reform Objectives
Irdai’s proposal would set hard, product- and channel-based limits to regulate commissions according to the type and effort involved in selling and servicing policies.
Expense limits and jobs
IBAI’s Concerns
IBAI says sharply lower expense limits could force insurers to reduce sales, servicing and claims staff because efficiency alone would not offset the cuts.
Irdai’s Reform Objectives
Irdai’s proposal seeks lower expenses of management as part of a broader overhaul of insurance distribution.
Policyholder protection
IBAI’s Concerns
IBAI supports policyholder protection but says the proposal does not ensure savings will reach customers through lower premiums and could reduce access to insurance.
Irdai’s Reform Objectives
Irdai’s stated objectives include greater transparency, curbing misselling, protecting policyholders and widening insurance coverage.
- Affected brokers
- The Insurance Brokers Association of India represents 798 licensed insurance brokers.
- Proposed commission structure
- Irdai proposed more than 30 commission caps based on product, business segment, distribution channel, complexity and servicing effort.
- Selected commission changes
- Proposed ranges include 25%-30% for term insurance, 15%-20% for health insurance, 0%-15% for motor insurance and 5%-25% for savings plans.
- Life insurer expense limit
- The proposed expenses-of-management 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.
- Distribution workforce
- Brokers sponsored 14.81 lakh of India’s 27.18 lakh point-of-sale persons and 16,230 of 26,316 motor insurance service providers as of March 31, 2025.
- IBAI response deadline
- The association said it will submit its detailed response to Irdai by October 25.
