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IRDAI’s proposed insurance-distribution reset is still under consultation, not a rule already changing policies, commissions or premiums. India Today reported that the proposals would set product- and channel-specific commission caps, tighten insurers’ expense limits over time and increase scrutiny of suitability and service. The arguments are sharp because lower distribution costs may benefit policyholders, but uniform limits could also affect advice and access. The reported deadline for feedback is October 25, 2026.
What IRDAI is proposing—and what it is not
India Today’s 2026 account of IRDAI’s two-part consultation paper, “Recalibrating Economics of Insurance Distribution,” describes a proposed reset of two related things: what insurers spend to distribute and manage policies, and how they pay agents, brokers and other distributors. The proposals are not final. They do not, on the basis of the report, change the terms of policies already in force or establish new commission rates today.
The detailed figures and measures below are those India Today attributed to the consultation paper. The paper itself is not linked here, so the reported figures should not be treated as independently verified primary-source text.
Product- and channel-specific commission caps
The report says IRDAI proposed commission limits that would vary by insurance product and distribution channel, taking account of the work and complexity involved in selling and servicing a policy. That is different from treating every policy sale as the same transaction: a distributor may need to compare options, explain exclusions and remain available after purchase.
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Tighter insurer Expenses of Management limits
Expenses of Management, or EoM, are insurer expenses subject to regulatory limits; commissions are one part of the distribution-cost debate, not the only expense an insurer incurs. According to India Today’s account, the proposal would phase in tighter limits: life insurers would move to 15% within two years and 12.5% within five years, while general insurers would move toward 20% over five years. These are reported proposal targets, not current binding limits established by this article.
More attention to conduct and service
The reported package also includes closer scrutiny of distributor sales and service, with indicators such as mis-selling, surrender and persistency made more visible. It proposes commission clawbacks for proven mis-selling, a “Know Your Distributor” function and a Public Insurance Registry. The report describes these as proposed measures; it does not establish their final design or implementation.
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Why the proposal has become a dispute
The disagreement is not simply about whether commissions are high or low. It is also about whether the same limits can fairly apply across products and channels, what counts as meaningful advice and service, and how to protect customers without making distribution less viable.
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| Question | Consumer-focused case for tighter controls | Distribution-industry case for caution |
|---|---|---|
| What should payment reward? | Monika Halan, as reported by India Today, argues for putting policyholders at the centre of regulation. The concern is that large upfront payments can reward closing a sale without enough attention to suitability, persistency or later claims support. | Mahavir Chopra argues that distributor effort varies. He supports a graded approach connected to product complexity and distributor capability, with measures such as persistency, complaints and satisfaction also considered. He is quoted as saying, “Effort is very subjective.” |
| Can one cost limit fit every distributor? | Consumer advocates stress accountability for what was recommended, whether exclusions were explained and who helps after a policy is in force. | KC Haridas points to brokerage costs for licensing, compliance, staff, training, premises and technology, which differ from an individual agent’s costs. The industry argues that common limits could miss these differences. |
| What does IBAI support? | The Insurance Brokers Association of India (IBAI) supports some consumer protections, including stronger suitability requirements, a ban on compulsory insurance bundling with loans and clawbacks for proven mis-selling. | IBAI opposes commission caps and tighter EoM limits. It questioned changing the 2023 EoM framework before its scheduled 2028 review, called for a regulatory impact assessment and sought intervention by the prime minister and finance minister. Those are the association’s arguments, not established forecasts. |
What the reported figures show—and what they cannot establish
India Today attributed the following figures to the consultation paper or, where noted, to IBAI. The report does not provide enough detail to independently assess the underlying definitions and methods, so the comparisons are useful as reported claims—not proof that a particular rule will produce a particular outcome.
| Reported figure | Attribution and qualification |
|---|---|
| 9% average commission, with a reported range of 3% to 39% | India Today’s account of the IRDAI consultation paper says this was the average among private life insurers as a share of total premium in FY26. |
| Above 20% average commission | India Today’s account of the paper reports this for general insurance; it does not specify a year alongside the figure. |
| 125% increase in distributor remuneration versus 28% growth in new business premium | India Today’s account of the paper reports these changes for a representative corporate-agent sample between FY23 and FY25. |
| 37% increase in general-insurance premium sourced versus a 173% increase in commissions | India Today’s account of the paper reports this broker-channel comparison in the context of the period after cap removal, but does not repeat a precise period alongside the comparison. |
| 48% versus 71% 61st-month life-insurance persistency | India Today’s account of the paper reports 48% overall and 71% for online sales; it does not specify a year. Persistency is an indicator of whether policies remain in force over time, not a direct measure of why a customer kept or surrendered a policy. |
| At least 10 lakh livelihoods potentially at risk over five years | IBAI’s estimate, as reported by India Today in 2026. It is an association estimate, not a verified employment forecast. |
| Around 1,000 brokers in the market, of whom about 300 were active | IBAI’s estimate, as reported by India Today in 2026; the report does not establish an independent count. |
The figures help explain why regulators and industry participants are arguing about how commissions and expenses should be controlled. They do not, by themselves, show that commission growth caused poor outcomes, that every distributor earns the same way, or that a cap would improve or worsen service.
Will insurance get cheaper?
Not necessarily. The intended consumer benefit is that lower distribution and operating costs could leave insurers with more room to reduce prices or improve value. But a lower commission does not automatically translate into a proportionate reduction in a customer’s premium: insurers have other costs, and premiums also depend on the product and the risks it covers. India Today specifically notes that health premiums are affected by claims and healthcare costs.
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Even if a cost reduction is achieved, the effect on a customer depends on how insurers respond. The proposal itself does not guarantee a premium cut or specify an individual saving.
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A policyholder needs more than a well-completed application. Suitability depends on whether the cover fits the customer’s needs and circumstances; useful advice includes a clear explanation of exclusions and obligations; service can matter at renewal and when a claim is made. The consultation debate therefore raises a practical question: who will help if the person who sold the policy leaves or becomes unavailable?
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Shilpa Arora of Insurance Samadhan, as quoted by India Today, puts the limit of a clawback plainly: “Recovering commission does not automatically correct a policy, restore cover or pay a valid claim.” A financial penalty may address a distributor’s conduct, but it does not, on its own, repair the customer’s position or provide continuing support.
What the reported cases illustrate
India Today described two individual consumer cases. They illustrate the kind of harm that can arise when a sale is unsuitable or misleading, but they are anecdotes, not representative statistics.
- A retired couple in Kolkata reportedly paid around Rs 12 lakh across two policies they later found unsuitable.
- A man in Mumbai reportedly bought three policies after being told they were required to obtain a Rs 40 lakh interest-free loan.
These accounts help explain why consumer advocates want suitability and sales conduct to be central to regulation. They do not establish how common such cases are or what specific remedy the proposed rules would provide.
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What customers can check while the proposal is under discussion
Because the proposals are not final, customers should assess a policy on its terms rather than assume that the consultation has changed its price or service. Before buying, ask the seller to make the following clear:
- Why this policy fits your needs, and what alternatives were considered.
- What the policy excludes, what conditions apply and what you must do to keep cover active.
- Who your service contact will be after purchase, including if the seller is no longer available.
- Where to get help with renewals and claims, and how to raise a complaint.
The proposed reset will ultimately be judged not just by the limits it sets, but by whether customers receive suitable recommendations, understandable explanations and reliable support throughout a policy’s life.
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