IRDAI Proposes Tighter Caps on Insurance Commissions
The regulator said private life insurers’ expenses rose to 20.2% of gross premium in FY26 as it seeks to curb distribution costs.
- On Wednesday, The Insurance Regulatory and Development Authority of India proposed stricter limits on insurance commissions and a phased reduction in Expenses of Management to improve policyholder value.
- The regulator argued the existing framework introduced in 2023 failed to reduce distribution costs, noting private life insurers' total expenses rose to 20.2% of gross premium in FY26.
- Distributor remuneration in the life insurance corporate agency channel grew 125% between FY23 and FY25, while new business premium rose only 28%, prompting the proposed return to hard commission caps.
- IRDAI also proposed stronger safeguards against Mis-selling, including a ban on compulsory bundling of insurance with loans and a Public Insurance Registry to track sales personnel conduct.
- The authority plans to reorganize distribution architecture into three broad categories while easing entry requirements for intermediaries to conduct non-insurance financial and non-financial activities.
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