Archive · 11 Oct 2026
IRDAI Chairman Urges Focus on Actual Health Insurance Payouts
India’s insurance regulator is considering new rules for how insurance is sold.
The rules are meant to make it less rewarding to sell a policy that does not fit a customer.
More of a seller’s pay could depend on whether the policy stays active.
Customers should also be told why a policy suits their needs.
If a sale is found to be misleading, the customer could get the full premium back under the proposed approach.
The regulator is also looking at health-insurance complaints and premium increases.
It says the amount an insurer actually pays on claims matters, not just its overall settlement rate.
The public can comment before the rules are finalized.
The new rules could begin in 2027.
IRDAI Chairman Ajay Seth said the regulator is monitoring how much health insurers actually pay, not only headline claim-settlement ratios.
Proposed distribution reforms would lower upfront commissions, link more payouts to policy persistence, and require records showing why a product suits the customer.
If mis-selling is established, the proposals provide for a full premium refund, commission clawback, and joint responsibility for the insurer and distributor.
The consultation remains open until October 25; draft regulations will be published for further public feedback before final notification.
Implementation is being considered for January 1 or April 1, 2027, with management-expense limits phased in over time.
- Who
- The Insurance Regulatory and Development Authority of India (IRDAI), led by Chairman Ajay Seth.
- What
- IRDAI is consulting on insurance distribution and expense reforms and monitoring actual health insurance claim payments.
- When
- Comments are open until October 25; implementation is being considered for January 1 or April 1, 2027.
- Where
- India.
- Why
- To curb mis-selling, improve policyholder value, and address concerns about insurance costs and claims.
- Consultation deadline
- October 25
- Possible implementation dates
- January 1, 2027, or April 1, 2027
- Proposed commission approach
- Lower first-year commission, with more payout linked to policy persistence
- Proposed mis-selling remedy
- Full premium returned to the policyholder, commission clawed back, and joint and several responsibility for insurer and distribution entity
- Health claim rejection safeguard
- A claim cannot be rejected without approval from the insurer’s Claims Review Committee and reasons citing specific policy terms
- Planned claims reforms
- Comprehensive claims management reforms are planned for FY2027-28
- Premium and inflation analysis
- Joint working groups with healthcare providers and insurers are studying claims and medical inflation