Archive · 4 Oct 2026
IBAI Warns Irdai Distribution Reforms Threaten One Million Livelihoods
India’s insurance regulator has suggested new limits on how much insurers can spend and pay in commissions.
The brokers’ association says these changes could put at least one million people’s jobs or livelihoods at risk.
It says insurers might cut staff who sell policies, help customers and handle claims.
The association also worries that some payments could move into less transparent arrangements.
It says smaller insurers may find it especially hard to meet the proposed limits.
The proposals cover several kinds of insurance and include lower expense limits over time.
The association has asked the government’s top leaders to review the possible effects.
The changes are proposals, not rules that the articles say have already taken effect.
The Insurance Brokers Association of India (IBAI) says proposed insurance distribution reforms could put at least one million livelihoods at risk.
Irdai’s consultation paper proposes more than 30 commission caps and lower expenses-of-management limits across insurance sectors.
IBAI argues that smaller distribution budgets could reduce sales, servicing and claims staff, despite the need to expand insurance access.
The association warns that sub-caps could encourage off-book payments and revive GST compliance problems addressed by 2023 regulations.
IBAI has asked Prime Minister Narendra Modi and Finance Minister Nirmala Sitharaman for an impact assessment before new limits are notified.
- Who
- The Insurance Brokers Association of India (IBAI) raised concerns about proposals from the Insurance Regulatory and Development Authority of India (Irdai).
- What
- IBAI says proposed commission and expense limits could threaten livelihoods and create other problems for insurers and policyholders.
- When
- IBAI’s letter came a week after Irdai unveiled the proposed distribution reforms; the article does not give a date.
- Where
- India.
- Why
- IBAI says the proposed limits could lead to staffing cuts, shrink distribution reach and encourage alternative payment practices.
IBAI’s concerns
Irdai’s proposed framework
Commission and expense limits
IBAI’s concerns
IBAI says the proposed caps could lead to job cuts, reduce insurance distribution and disadvantage smaller or emerging insurers.
Irdai’s proposed framework
Irdai’s consultation paper proposes commission caps across products and channels based on the effort involved in selling and servicing policies, alongside lower expense-of-management limits.
Impact on market practices
IBAI’s concerns
IBAI warns that sub-caps could prompt alternative payments, revive GST compliance problems and disadvantage public-sector insurers.
Irdai’s proposed framework
The article describes the proposed limits but does not report Irdai’s response to these concerns or its stated assessment of their potential effects.
- Potential livelihoods at risk
- At least 1 million, according to IBAI.
- Insurance distribution workforce
- More than 8.3 million professionals, according to Irdai data for FY25.
- Proposed life insurer expense limits
- 15% within two years and 12.5% within five years, compared with a current overall limit of 30–35%.
- Proposed general insurer expense limit
- A reduction from 30% to 20% over five years.
- Proposed standalone health insurer expense limit
- A reduction from 35% to 30%.
- Proposed commission caps
- More than 30 caps across term, health, motor and savings insurance plans.
- IBAI membership context
- The association represents India’s 798 licensed insurance brokers, as stated in the article.