Archive · 6 Oct 2026
Insurance Brokers Challenge IRDAI’s Proposed Commission Caps
India’s insurance regulator has suggested new limits on the money paid to people and companies that sell insurance.
The proposed limits would vary depending on the kind of policy and how much work it takes to sell.
The regulator says the changes are meant to lower costs and could make insurance more affordable.
An association representing insurance brokers disagrees with the plan.
It says customers might not receive any savings and that many jobs could be affected.
The association also worries that some payments could be renamed as marketing fees to get around the limits.
It wants the regulator to study the effects before making changes.
The rules are still being discussed, and feedback can be sent until October 25.
IRDAI’s September 23 discussion paper proposes linking insurance commissions to product complexity and distribution work.
Proposed caps vary by product and channel, including 2% to 5% for banks and lenders selling insurance alongside loans.
The Insurance Brokers Association of India says the changes may shift savings to insurers’ owners without ensuring lower costs for policyholders.
IBAI estimates at least one million jobs could be at risk over five years and warns of possible disguised payments to distributors.
IBAI seeks an impact assessment and wants the current framework retained until its scheduled 2028 review; feedback is due October 25.
- Who
- The Insurance Regulatory and Development Authority of India proposed the changes; the Insurance Brokers Association of India opposes them.
- What
- Proposed reforms would link insurance distribution commissions to product complexity and work, with caps for certain products and channels.
- When
- The discussion paper was released September 23; stakeholder feedback is due October 25. IBAI wants the current framework retained until its scheduled 2028 review.
- Where
- India.
- Why
- IRDAI says the proposals aim to reduce distribution costs and make policies more affordable; IBAI says savings may not reach policyholders and warns of employment and industry effects.
IRDAI’s stated rationale
IBAI’s objections
Costs and policyholder affordability
IRDAI’s stated rationale
IRDAI says linking commissions to product complexity and distribution effort is intended to reduce distribution costs and ultimately make policies more affordable.
IBAI’s objections
IBAI argues that any savings could flow to insurance-company owners without insurers being required to pass them on to policyholders.
Effects on jobs and distribution
IRDAI’s stated rationale
The discussion paper proposes commission changes based on product and channel, including lower commissions for some distribution channels.
IBAI’s objections
IBAI says the reforms could harm the distribution industry and employment, estimating that at least one million jobs could be at risk over five years.
Commission limits and oversight
IRDAI’s stated rationale
IRDAI has put the proposed framework out for stakeholder feedback, with submissions due October 25.
IBAI’s objections
IBAI warns that insurers might disguise excess commissions as marketing fees and asks for an impact assessment before hard caps are introduced.
- Discussion paper
- “Recalibrating Economics of Insurance Distribution,” released September 23.
- Feedback deadline
- October 25.
- Bank and lender commissions
- Proposed caps of 2% to 5%, depending on the product.
- Health insurance commissions
- Proposed purchase commissions of 15% to 20%; renewals and portability of 5% to 10%.
- Estimated employment risk
- IBAI says at least one million jobs could be at risk over five years; its estimate excludes salaried insurance-company employees.
- IBAI request
- Publish an impact assessment and retain the existing commission framework until its scheduled 2028 review.