Archive · 8 Oct 2026
Irdai Reforms Aim to Expand Choice and Lower Motor Insurance Costs
Irdai, India’s insurance regulator, wants to change how car insurance is sold.
Right now, many people buy insurance from the dealer when they buy a new car.
The proposed changes could let buyers compare different insurance plans and prices instead.
Dealers and some vehicle-company brokers earn commissions when they sell insurance.
The proposed limits would reduce some of those commissions.
Buyers could use a QR code to compare products.
Dealers also could not refuse cashless repairs just because a customer chose another insurer.
Experts say this may give customers more choice and put pressure on dealers’ profits.
Irdai has proposed distribution reforms intended to let new vehicle buyers compare insurance products and prices.
Industry experts say the changes could reduce dealers’ influence over buyers’ first-year insurance and renewals.
Motor Insurance Service Providers, including dealers and OEM-linked brokers, handle about 46% of motor insurance premiums.
Irdai data cited in the article shows average commissions for these providers range from 15% to 40%, with maximum rates as high as 75%.
Under proposed caps, dealer distribution entities would receive no commission on third-party cover and 5% on new-vehicle own-damage cover.
- Who
- The Insurance Regulatory and Development Authority of India (Irdai), new vehicle buyers, dealers and OEM-linked brokers.
- What
- Irdai has proposed changes to insurance distribution, including commission caps and ways for buyers to compare products.
- When
- The proposals are described in an Irdai consultation paper; no implementation date is stated.
- Where
- India.
- Why
- The proposals aim to broaden consumer choice and address high commissions and dealers’ influence over motor insurance sales.
Consumer Choice and Competition
Dealer Earnings and Distribution
Effect on buyers
Consumer Choice and Competition
Industry experts say buyers could compare products, avoid being steered to a dealer-linked policy and face lower distribution costs.
Dealer Earnings and Distribution
The articles note that insurance contributes significantly to the profitability of some vehicle sales, so reduced commissions could materially affect dealer margins.
Dealer role in insurance sales
Consumer Choice and Competition
Supporters say reducing dealer control could bring competition to a segment with high distribution costs.
Dealer Earnings and Distribution
Dealers and OEM-linked brokers currently handle a substantial share of motor premiums; the article reports that reforms could weaken this sales channel’s control over first-year policies and renewals.
- Dealer and OEM-linked share
- Motor Insurance Service Providers account for around 46% of total motor insurance premiums.
- Average commissions
- Average commission rates for these providers range from 15% to 40%.
- Maximum commissions
- Maximum commission rates can range from 24% to 75%.
- Proposed third-party commission
- A dealer registered as an insurance distribution entity would receive no commission on third-party cover.
- Proposed new-vehicle own-damage commission
- The proposed rate is 5%, compared with a previously cited average of 26%.
- QR-code comparison
- The proposal would provide buyers with a QR code to compare insurance products.
- Growth figures
- From FY23 to FY25, motor insurance premiums grew about 34%, while motor commissions rose about 259%.