India’s insurance regulator is considering introducing commission caps as early as 1 January, alongside tighter expense limits and anti-mis-selling measures in a major overhaul of distribution rules.
India’s insurance regulator is weighing a rapid start to a major shake-up of distribution rules, with new commission caps possibly taking effect as soon as January, according to an interview with an Insurance Regulatory and Development Authority of India executive reported by Bloomberg News. Girijia Subramanian said the authority is considering January 1 and April 1 as possible implementation dates, a sign that the regulator wants to move quickly after earlier efforts to liberalise the market failed to improve cost discipline.
The proposed overhaul, first outlined last month, would cap commissions paid by insurers to brokers and other distributors across most lines of business, including life, health and property and casualty cover. According to LiveMint and Business Standard, the package also includes tighter limits on insurers’ management expenses and stronger safeguards against mis-selling, as the regulator tries to make insurance cheaper and improve the buying experience for policyholders. In a separate interview reported by Moneycontrol, IRDAI chairman Ajay Seth said the regulator was not planning a glide path for the commission caps and wants insurance to be bought rather than sold.
The changes have unsettled the market. PB Fintech, the parent of Policybazaar, fell sharply when the proposals were announced, while Turtlemint Fintech Solutions has lost about half its value since then, according to the article and Bloomberg-cited analysis. Jefferies said the measures could cut earnings for some fintech firms, and the Insurance Brokers Association of India has warned that the wider impact could extend to as many as 1 million jobs, according to LiveMint. Subramanian rejected the idea that the reforms would trigger mass layoffs, telling Bloomberg the changes should instead broaden distribution and make it easier for new players to enter the market.
The regulator argues that the timing matters because commissions have been rising faster than premiums since relaxed rules were introduced in 2023, while higher distribution spending has not translated into broader insurance coverage. The latest proposal also aims to push insurers and intermediaries beyond India’s largest cities by offering higher commission limits for business written in smaller towns and lower entry barriers for distributors, while allowing them to carry out other financial and non-financial activities. IRDAI is giving stakeholders until October 25 to submit comments before it issues draft regulations and then opens another round of consultation. The authority also plans a phased tightening of expense limits over five years, with the first milestone due in the financial year ending March 2029, and says it is prioritising reform quality over speed, even if that means moving ahead earlier than some in the industry would prefer.
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