Archive · 3 Oct 2026
IRDAI Proposes Changes to Curb Motor Insurance Commissions
When people buy a car, they often get insurance through the dealership because it is convenient.
Dealers and other sellers can earn large commissions for arranging these policies.
India’s insurance regulator, IRDAI, says commissions have risen much faster than motor insurance premiums.
It has proposed letting people buy policies through online platforms such as Bima Sugam.
Dealers would need to clearly show buyers that option, including a QR code.
The proposal would also reduce or limit commissions on some types of insurance.
These are proposals in a consultation paper, not stated here as rules already in force.
Distributors earned nearly ₹7,050 crore in commission on ₹29,000 crore of motor insurance premiums in FY25, according to IRDAI's consultation paper.
The average motor insurance commission rate was 24% in FY25; commissions rose nearly 259% from FY23 to FY25 while premiums grew around 34%.
For new vehicles, OEM brokers received an average 27% commission and Motor Insurance Service Providers, including dealers, received 38%.
IRDAI proposes making motor insurance available through Market Infrastructure Institution platforms, including Bima Sugam, and requiring dealers to display that option to new-car buyers.
The proposals include no commission for distribution entities on new-vehicle third-party insurance, 2.5% for agents, and caps of 5% to 15% on other covers.
- Who
- IRDAI; motor insurance distributors including OEM brokers and Motor Insurance Service Providers such as vehicle dealers.
- What
- IRDAI has proposed platform access and commission limits for motor insurance.
- When
- The consultation paper was published the week before the article; the figures cited are for FY25 and FY23–FY25.
- Where
- India.
- Why
- The regulator says motor insurance commissions are high and lack of transparency contributes to them.
Regulatory concern
Customer convenience
Dealer-arranged insurance
Regulatory concern
IRDAI's consultation paper says lack of transparency has driven high commissions, despite motor insurance products being simple and third-party cover being mandatory.
Customer convenience
Many buyers use dealers to arrange insurance for convenience and to avoid arranging a policy separately; the article says buyers are not required to buy through dealers.
Proposed online platform option
Regulatory concern
IRDAI proposes access to insurance through MII platforms and visible dealer notices, aiming to give buyers another purchase route.
Customer convenience
The article notes Bima Sugam is expected to become operational in the next four to six months; it does not report a response from dealers or other distributors.
- FY25 premiums cited
- ₹29,000 crore
- FY25 distributor commissions cited
- Nearly ₹7,050 crore
- Average commission rate
- 24% in FY25
- Commission growth, FY23–FY25
- Nearly 259%, compared with around 34% premium growth
- New-vehicle commission averages
- 27% for OEM brokers; 38% for MISPs
- Proposed new-vehicle third-party commission
- Nil for distribution entities; 2.5% for agents
- Proposed other-cover commission caps
- 5% to 15%, depending on channel and vehicle age