Insurers broadly back Irdai’s proposed cost and commission reforms but say the 2027 timetable must be phased in to protect growth, agency networks and product choice.
Life insurers in India are pressing the regulator for a slower transition to proposed distribution reforms, arguing that the changes could improve customer outcomes and make the industry more efficient only if they are phased in with more care. Speaking at the Business Standard BFSI Insight Summit 2026 in Mumbai, senior executives broadly supported the direction of the Insurance Regulatory and Development Authority of India’s consultation paper, but said the timetable, commission framework and cost cuts need to reflect the very different scale and business models across the sector.
The regulator’s proposals would lower life insurers’ expenses of management to 15 per cent of premium within two years and to 12.5 per cent within five years, with implementation proposed from 1 April 2027. The private life insurance sector’s expense ratio stood at 20.2 per cent in FY26, according to Irdai data, a gap that industry leaders said cannot be closed without a meaningful glide path. Business Standard reported earlier that the consultation also sets out product- and channel-specific commission caps and a broader overhaul of the economics of distribution.
Kamlesh Rao, managing director and chief executive of Aditya Birla Sun Life Insurance, told the summit that the issue was not the regulator’s destination but the pace at which the industry should reach it. He said gradual reductions in distribution payouts and other expenses could preserve growth while lifting value for policyholders. Mahesh Balasubramanian, managing director of Kotak Life, said reform would inevitably bring short-term pain, but argued that insurers needed time to understand how the new rules would affect their businesses while they adapted to a more customer-focused model.
Rushabh Gandhi, managing director and chief executive of IndiaFirst Life Insurance, said the proposed cost limits should be eased over a longer period and that commission rules should be reconsidered across products. He said deferred annuity products, which support retirement saving, might need slightly higher commissions, while the proposed structure for unit-linked insurance plans could be difficult to implement alongside existing reduction-in-yield constraints. Alok Rungta, managing director and chief executive of Generali Central Life Insurance, said the overhaul was effectively a reset of how the industry operates, not just a tweak to distribution rules, and that policymakers should recognise the different starting points of insurers when setting deadlines.
The executives also challenged the idea that mis-selling is the defining issue in life insurance. Gandhi said companies have already strengthened checks such as suitability reviews, pre-issue verification calls, video consent and data analytics to flag suspicious agent behaviour. Balasubramanian said complaints and lapses in policy continuation should be seen in the context of life insurance as a long-term savings product, where customers may change course after several years without having been wrongly sold a policy. Rao pointed to an industry claim settlement ratio of 97.6 per cent and said insurers had paid out six to eight times the claims they had expected during the Covid-19 pandemic without asking for regulatory or government support.
The debate also extended to credit-life insurance, which covers outstanding loans if a borrower dies. Gandhi said the product helps expand protection for families that might otherwise inherit debt, while Rao said it is one of the biggest sources of policy volumes after the Pradhan Mantri Jeevan Jyoti Bima Yojana. Rungta warned against forced bundling but said the value of the cover should not be overlooked. Despite the pressure for lower costs, the industry leaders said the wider opportunity for life insurance remains large, with more affordable products, better distribution and rising awareness likely to support growth if the reforms are implemented without weakening the agency network that still reaches much of the country.
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