Archive · 25 Sep 2026
IRDAI Proposes Insurance Changes That Could Lower Costs
India’s insurance regulator wants to change how insurance is sold.
It may limit how much agents, banks and brokers can earn from selling policies.
This could reduce insurers’ selling costs and might eventually make some policies cheaper.
However, insurers may not pass all the savings to customers.
Banks may also have to stop making insurance seem compulsory when people take loans.
Customers could get clearer information about prices, coverage and commissions.
A concern is that sellers may avoid small policies or customers in smaller cities if those sales become less profitable.
This could also reduce help with renewals, policy changes or claims.
The final rules are still being discussed and may change.
IRDAI has proposed caps on insurance commissions, lower insurer expense limits and tighter rules against mis-selling.
Product-level commissions could be reduced across life, health and motor insurance, but lower premiums are not guaranteed.
The proposal would restrict compulsory insurance bundling with loans and require clearer disclosure of costs and alternatives.
Lower commissions could reduce incentives to sell small-ticket policies in smaller cities and may affect post-sale support.
Additional commission provisions for smaller towns and rural areas are proposed to help preserve insurance access.
- Who
- The Insurance Regulatory and Development Authority of India, insurers, distributors and policyholders are involved.
- What
- IRDAI has proposed an overhaul of insurance distribution rules, including commission caps, expense limits, anti-mis-selling measures and restrictions on loan-linked insurance sales.
- When
- The proposals are currently being discussed and could change after feedback from industry and other stakeholders; product-level commission caps were removed in 2023.
- Where
- The proposed changes would apply to insurance distribution across India, including large cities, smaller towns and rural areas.
- Why
- IRDAI aims to make insurance sales more transparent, reduce practices that can influence purchases and encourage need-based distribution while expanding access.
Potential Consumer Benefits
Potential Distribution Risks
Premiums and selling costs
Potential Consumer Benefits
Commission caps and lower insurer expense limits could reduce distribution costs and potentially create room for lower premiums.
Potential Distribution Risks
Lower commissions do not automatically reduce premiums because insurers may not pass savings on to customers.
Transparency and choice
Potential Consumer Benefits
Clearer disclosure of commissions, prices and loan-linked insurance could help customers make more informed, need-based choices.
Potential Distribution Risks
If selling incentives become too weak, distributors may focus on larger cities and higher-value products, reducing choice for some customers.
Access and service
Potential Consumer Benefits
Additional commission provisions for smaller towns and rural areas could support wider insurance distribution.
Potential Distribution Risks
Distributors warn that lower returns on small policies could reduce access to two-wheeler insurance and weaken assistance with servicing and claims.
- Regulator
- Insurance Regulatory and Development Authority of India (IRDAI)
- Commission proposal
- Product-level caps would vary by policy type, distribution channel, policy size and selling effort.
- Potential premium effect
- Lower distribution costs could create room for lower premiums, but insurers would need to pass savings to customers.
- Loan-linked insurance
- Compulsory bundling of insurance with credit or loans would be prohibited under the proposal.
- Motor insurance
- No commission is proposed for third-party motor insurance on new vehicles.
- Small-ticket concern
- Lower commissions could reduce incentives to sell policies such as two-wheeler insurance in smaller cities and towns.
- Rural access
- Additional commission provisions are proposed for policies sold in smaller towns and rural areas.