Business · Companies · 7 hrs ago
Health insurers seek to exclude mandatory policies from expense limits
India’s standalone health insurers want mandatory policies excluded from expense calculations used to set their expense limits.
They have asked the Insurance Regulatory and Development Authority of India to exclude motor third-party, crop insurance and government-sponsored health schemes from the calculation base.
Insurers say these products have different distribution costs from retail policies and may not involve intermediaries.
The regulator has proposed a common expense-of-management framework for general and standalone health insurers, with limits falling to 25% within two years and 20% over five years.
Standalone insurers say counting mandatory business could give general insurers more room to spend on other products, putting them at a disadvantage.
The regulator also plans to change how expenses are calculated and set product-specific commission caps.
The regulator is considering the proposed changes as it revises the rules.
Standalone health insurers want mandatory insurance products excluded from the base used to calculate expense-of-management limits.
They say including products such as motor third-party and government-sponsored health schemes could disadvantage them under a proposed common framework.
The insurers have made the recommendation to the Insurance Regulatory and Development Authority of India as part of feedback on proposed regulatory changes.
The regulator proposes reducing the expense limit to 20% over five years, with a transition to 25% within two years.
The proposed changes also include a revised calculation method and product-wise commission caps.
- Who
- Standalone health insurers, including Star Health, are seeking the change.
- What
- They want mandatory insurance products excluded from the base used to calculate expense-of-management limits.
- When
- The recommendation was made as feedback on proposed regulatory changes; the article was published on October 29, 2026.
- Where
- India.
- Why
- They say mandatory products have different distribution economics and their inclusion could disadvantage standalone health insurers under a common framework.
Standalone health insurers
Irdai's proposed common framework
Calculation base
Standalone health insurers
Mandatory products should be excluded because their distribution economics differ from retail insurance and including them could put standalone health insurers at a disadvantage.
Irdai's proposed common framework
The proposal would bring general and standalone health insurers under a common expense-of-management framework; the sources do not state Irdai's response to the insurers' request.
Irdai proposed a common expense-of-management framework for general and standalone health insurers, with a revised calculation method and product-wise commission caps.
Standalone health insurers recommended excluding mandatory products from the calculation base.
- Current EoM cap for general insurers
- 30% of gross written premium
- Current EoM cap for standalone health insurers
- 35% of gross written premium
- Proposed expense limit
- Decline to 20% over five years
- Transition discussed
- Bring the limit down to 25% within two years
- Products insurers want excluded
- Motor third-party, crop insurance and government-sponsored health schemes
What people are saying
The point is, for government health business or for motor third-party business, which are mandatory in nature, there is no intermediary involved and should not be allowed for the 25% limit
These should be removed from the base so that the EOMs are more reflective of the actual cost that is being used for distribution of consumer-facing products
Standalone health insurers focus exclusively on health insurance and retail customers, while general insurers operate across multiple lines, including motor, crop and government-sponsored insurance schemes