Archive · 30 Sep 2026
IRDAI’s Proposed 2% Commission Cap Raises Rural Insurance Access Concerns
India’s insurance regulator has proposed limiting commissions on insurance sold with loans to 2%.
Sanjib Jha of Coverfox says this could make it too costly to help people in villages and smaller towns get insurance.
He worries that companies may not be able to pay workers to enrol and assist these customers.
Jha supports stopping forced insurance sales and making prices and terms clearer.
However, he says cutting commissions alone could hurt access to insurance.
He suggested using technology and artificial intelligence to lower the cost of reaching customers.
He said these tools might reduce customer acquisition costs by 60% to 70%.
The regulator wants lower distribution costs and better value for policyholders.
Jha said any savings should eventually reduce premiums without damaging rural service networks.
Coverfox founder Sanjib Jha warned that IRDAI’s proposed 2% cap could make rural insurance distribution financially difficult.
Jha said the cap may weaken the last-mile networks serving Tier-2, Tier-3 and rural markets.
He welcomed measures against dark patterns, coerced bundling and insurance mis-selling.
Jha urged greater use of technology, including AI-driven voice workflows, to reduce distribution costs.
IRDAI says its broader proposals aim to rationalise distribution costs and improve policyholder value.
- Who
- Coverfox founder and managing director Sanjib Jha and the Insurance Regulatory and Development Authority of India (IRDAI).
- What
- IRDAI has proposed a 2% commission cap on loan-linked insurance, prompting concerns about rural distribution and servicing.
- Where
- India, particularly Tier-2, Tier-3, smaller-town and rural markets.
- Why
- IRDAI aims to reduce insurance distribution costs, improve policyholder value and address practices including coerced bundling and mis-selling; Jha says the proposal could undermine last-mile access.
IRDAI’s cost-control and consumer-protection rationale
Jha’s last-mile access concerns
Commission limits
IRDAI’s cost-control and consumer-protection rationale
IRDAI’s proposed framework seeks to rationalise insurance distribution costs through product- and channel-specific commission limits and changes to Expenses of Management.
Jha’s last-mile access concerns
Jha says capping intermediary remuneration and Expenses of Management without accounting for rural servicing costs could make physical and digital outreach financially unviable.
Insurance access
IRDAI’s cost-control and consumer-protection rationale
Lower distribution costs are intended to improve value for policyholders and address problematic sales practices.
Jha’s last-mile access concerns
Jha warns that reduced commissions could weaken the networks needed to enrol and service borrowers in underserved markets.
Reducing costs
IRDAI’s cost-control and consumer-protection rationale
The proposal focuses on limiting distribution expenses as part of broader insurance reforms.
Jha’s last-mile access concerns
Jha argues that technology, including AI-driven voice and conversational workflows, should reduce costs rather than relying only on margin compression.
- Proposed commission cap
- 2% on loan-linked insurance
- Concern raised by
- Sanjib Jha, Coverfox founder and managing director
- Markets potentially affected
- Tier-2, Tier-3 and rural markets
- Estimated technology savings
- AI-driven voice and conversational workflows could reduce customer acquisition costs by 60% to 70%, according to Jha
- IRDAI’s broader measures
- Product- and channel-specific commission limits and changes to Expenses of Management
- Targeted practices
- Dark patterns, coerced insurance bundling with loans and mis-selling
- Policyholder objective
- Lower distribution costs and improved policyholder value