Insurance Brokers Oppose IRDAI Reforms, Project 70% Revenue Loss

The Insurance Brokers Association of India (IBAI) has voiced strong opposition to proposed norms by the Insurance Regulatory and Development Authority of India (IRDAI), forecasting a potential 60-70% collapse in revenue for the insurance broking sector.

Industry representatives stated at a press briefing that the proposed changes, including the reintroduction of product-specific commission caps and tighter expense limits for insurers, could result in the loss of up to 1 million jobs within the insurance distribution sector, which employs over 8.3 million people.

IBAI has requested an extension for submitting feedback on the proposals, moving the deadline to the end of December from the current October 25th. While supporting the regulator's goal of making insurance more affordable, the association argues the sweeping changes threaten small businesses.

The brokers also contested IRDAI data showing a 37% rise in general insurance premiums sourced through brokers and a 173% increase in commission payouts between FY23 and FY27. IBAI attributes the commission rise to the reclassification of off-book marketing expenses following regularization, not inflationary pressures.

Concerns have been escalated to the Prime Minister's Office and Finance Ministry. The potential impact has already led to job cuts, with insurtech firm Quickinsure trimming over 100 positions. Listed insurtech majors like Policybazaar and Turtlemint have also seen stock price declines due to the anticipated business impact.