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IRDAI’s proposed insurance distribution reset would reshape how insurers pay agents, brokers and other sellers—and how closely they are judged on suitability and service. It is still a proposal under consultation, not a rule that has changed policies, commissions or premiums. India Today reported that feedback was due by October 25, 2026. The argument is over whether tighter cost controls would better protect policyholders or risk weakening advice and service, particularly where selling and servicing insurance takes substantial work.
The details and figures in this explainer are attributed to India Today’s 2026 account of the consultation paper, “Recalibrating Economics of Insurance Distribution.” The underlying IRDAI paper has not been independently reviewed here, so its reported figures and descriptions should be read with that qualification.
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What does IRDAI reportedly want to change?
The reported package connects insurer spending on distribution with the way distributors are remunerated and assessed. It is not just a proposal to reduce commissions: it also includes tighter Expenses of Management limits and greater scrutiny of sales quality and policyholder service.
Product- and channel-specific commission caps
India Today reports that IRDAI proposed commission caps that would vary by insurance product and distribution channel. The proposal would take account of the effort and complexity involved in selling and servicing each type of insurance. The account does not establish the exact cap for every product or channel.
Tighter insurer expense limits
The reported proposal would phase in tighter limits on insurers’ Expenses of Management (EoM). India Today’s account gives these targets:
| Insurer category | Reported proposed EoM path |
|---|---|
| Life insurers | 15% within two years, tightening to 12.5% within five years, as reported by India Today from the IRDAI consultation paper. |
| General insurers | Moving toward 20% over five years, as reported by India Today from the IRDAI consultation paper. |
These are reported proposal targets, not limits shown to be in force. The account does not specify in the figures above the precise calculation base for each percentage.
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More visibility into sales and service
The proposal reportedly calls for closer scrutiny of distributor performance, with indicators such as mis-selling, policy surrender and persistency made more visible. It also includes commission clawbacks for proven mis-selling, a “Know Your Distributor” function and a Public Insurance Registry. India Today’s account describes these as proposed measures; it does not establish their final scope or operating rules.
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The dispute is not simply between people who want lower commissions and people who want higher ones. It is also about whether a common cap can fairly reflect differences in products, channels and the work distributors do after a sale.
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| Issue | Consumer-focused case for tighter controls | Distribution-industry concern |
|---|---|---|
| What should regulation reward? | Monika Halan, as reported by India Today, argues for putting policyholders at the centre. The concern is that large upfront commissions can reward closing a sale without enough regard for suitability, persistency or later claims support. | Mahavir Chopra, Beshak co-founder, argues that distributors can provide very different levels of help: assessing needs, comparing plans, explaining exclusions and assisting with claims. He supports a graded approach linked to product complexity and distributor capability, with outcomes such as persistency, complaints and satisfaction considered. His reported comment was: “Effort is very subjective.” |
| How should business costs be treated? | Tighter insurer expense controls are presented as one route to lower distribution and operating costs, with the intended benefit reaching consumers. | KC Haridas argues that brokerages bear costs for licensing, compliance, staff, training, premises and technology that differ from the costs of an individual agent. |
| What does the industry association support? | The Insurance Brokers Association of India (IBAI) supports some consumer-protection measures, including stronger suitability requirements, a ban on compulsory insurance bundling with loans and clawbacks for proven mis-selling, according to India Today. | 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. These are the association’s reported positions, not established forecasts of what the proposal would cause. |
The two sides therefore overlap on some protections but differ on whether cost limits should apply broadly and how much weight regulation should give to channel-specific service and operating costs.
What do the reported figures show—and what don’t they show?
India Today attributed the following figures to the IRDAI consultation paper or to people and organizations quoted in its report. The source account does not provide full methodologies for these comparisons, so the numbers indicate what was reported, not proof that a particular policy caused an outcome.
| Measure | Reported figure and qualification |
|---|---|
| Private life-insurer commissions | Average commission was 9% of total premium in FY26, with a reported range of 3% to 39%, according to the consultation paper as reported by India Today. |
| General-insurance commissions | Average commission was above 20%, according to the consultation paper as reported by India Today; the account does not specify the year for this figure. |
| Corporate-agent sample | Distributor remuneration rose 125% between FY23 and FY25, while new business premium grew 28%, according to the consultation paper as reported by India Today. The account describes a representative sample, not the whole market. |
| Broker channel | General-insurance premium sourced rose 37% while commissions increased 173%, according to the consultation paper as reported by India Today. The account places the comparison in the post-cap-removal period but does not state the comparison period alongside these figures. |
| Life-insurance persistency | 61st-month persistency was reported at 48%, compared with 71% for online sales, according to the consultation paper as reported by India Today. The account does not specify the year or methodology for this comparison. |
| Broker livelihoods and market size | IBAI estimated in 2026 that at least 10 lakh livelihoods could be at risk over five years. It also said there were around 1,000 brokers in the market and estimated that only about 300 were active, as reported by India Today. These are the association’s estimates, not independently established outcomes or counts. |
For consumers, commission and expense figures alone cannot establish whether a policy is suitable, whether service will continue, or whether premiums will fall. The reported persistency comparison points to a difference between channels, but the account does not establish why that difference exists.
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Will insurance get cheaper?
Lower distribution or operating costs do not automatically translate into proportionately lower premiums. The proposal’s intended consumer benefit is lower costs, but India Today’s account cautions that savings are not guaranteed to flow through directly. In health insurance, premiums also depend on claims and healthcare costs, so a change in commission by itself cannot determine what a customer will pay.
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What could change for a policyholder after the sale?
The consumer impact is about more than the price at purchase. It includes whether the recommendation fits the customer, whether exclusions are explained, who helps with renewals and claims, and whether there is a service contact throughout the policy’s life.
India Today reported two individual cases as illustrations, not representative statistics: a retired Kolkata couple paid around Rs 12 lakh across two policies they later found unsuitable; in Mumbai, a man bought three policies after being told they were required for a Rs 40 lakh interest-free loan. The cases show the kinds of concerns discussed in the debate, but do not establish how common such experiences are.
Shilpa Arora, Insurance Samadhan co-founder and COO, stressed the limits of treating commission recovery as a complete remedy: “Recovering commission does not automatically correct a policy, restore cover or pay a valid claim.” A clawback may address remuneration after proven mis-selling, but the reported proposal does not, on its own, answer who will help a customer fix an unsuitable policy or maintain service if the original seller leaves or becomes unavailable.
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India Today reported October 25, 2026 as the deadline for feedback. Until a final decision is made, the relevant questions are how the eventual rules define and apply the proposed controls—not whether today’s policy terms have already changed.
Quick Recap
- Whether final commission limits distinguish meaningfully between products and channels, as the reported proposal intends.
- How any EoM limits are calculated, phased in and applied to different insurer categories.
- What counts as proven mis-selling for a clawback, and how customers can obtain a remedy beyond commission recovery.
- Whether distributor assessments make suitability, persistency, complaints and service continuity visible in a way that reflects customer outcomes.
- Whether any cost reduction is passed through to policyholders, rather than assuming that lower commissions mean lower premiums.
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