IRDAI proposes insurance distribution reforms, including commission caps
India's insurance regulator IRDAI has released a consultation paper proposing significant reforms to insurance distribution. The changes aim to boost digital sales and reintroduce commission limits.
The Insurance Regulatory and Development Authority of India (IRDAI) has unveiled a consultation paper detailing proposed reforms to the country's insurance distribution landscape. The proposals aim to shift insurance towards a digitally discoverable, comparable, and purchasable product, reducing reliance on traditional intermediaries.
A central element of the proposed reforms is the creation of a regulator-owned Public Insurance Registry (PIR). This digital public infrastructure is intended to support customer-facing platforms like Bima Sugam, providing a standardized layer for identity verification, market information, and accountability across the insurance sector.
The paper also proposes the reintroduction of prescriptive commission caps after their removal in 2023. These new limits would vary based on product complexity, distribution channel, and the effort involved in selling. Crucially, all forms of distributor remuneration, including incentives and expense reimbursements, would be counted towards these caps.
IRDAI is also seeking to rationalize the distribution structure by consolidating various entities into three main categories: Insurance Distribution Entities (IDE), Insurance Distribution Persons (IDP), and Market Infrastructure Institutions (MII). This aims to create a clearer and more structured distribution framework.
Comments on the consultation paper, which is divided into two parts detailing the reforms and their cost analysis, are being accepted until October 25, 2026. The proposed changes are expected to significantly reshape the economics and operations of insurance distribution in India.