The Insurance Regulatory and Development Authority of India has launched a consultation on reforms that would simplify insurance distribution, reduce insurer expenses and recalibrate commissions while strengthening transparency and safeguards against mis-selling. The proposed architecture would consolidate distributors into Insurance Distribution Entities, Insurance Distribution Persons and Market Infrastructure Institutions under a principle of applying the same rules to entities with the same structure and functions. Registration, capital and fee requirements would fall, while distributors would gain greater flexibility to conduct insurance and other financial and nonfinancial activities. Expense of Management limits would decline through a phased glide path. For life insurers, the limit would apply at company level based on Gross Direct Premium Income and fall to 15% within two years and 12.5% within five years. For general insurers, the basis would shift from Gross Written Premium to domestic Gross Direct Premium Income, with the limit declining from 30% to 20% within five years. Commission limits would vary by segment, business line, channel, product complexity and servicing effort, with possible additional rewards for sales in rural areas and smaller population centers. Insurers and large distributors would have to disclose commission policies and structures, document customer needs and suitability, and include direct and indirect monetary and nonmonetary remuneration within the regulatory definition of commission. The proposals would prohibit volume or reward linked incentives for bank and nonbank financial company staff, permit commission clawbacks for mis-selling and strengthen controls against compulsory bundling and dark patterns. Digital distribution would be supported through Market Infrastructure Institutions, including Bima Sugam, and wider use of the Public Insurance Registry for comparison, portability and servicing.
2026-09-23Insurance Regulatory and Development Authority of India
Insurance Regulatory and Development Authority of India consults on distribution overhaul and lower insurer expense limits
The Insurance Regulatory and Development Authority of India is consulting on a simplified distribution architecture, lower insurer expense limits and commissions tailored by product, channel and servicing needs. Life insurer expense limits would fall to 12.5% of Gross Direct Premium Income within five years, while the general insurer limit would decline to 20%. The proposals also strengthen commission disclosure, mis-selling controls and digital distribution infrastructure.