IRDAI chairman Ajay Seth says proposed commission caps will be introduced through an orderly transition, as brokers warn the reforms could disrupt established sales models.
India’s insurance regulator is signalling that it wants to phase in its proposed overhaul of sales commissions without jolting the industry, even as brokers and insurers warn the changes could reshape how policies are sold across the country. Ajay Seth, chairman of the Insurance Regulatory and Development Authority of India, said the aim is to create an “orderly transition” from the current system to one he described as better for customers and the market alike.
The proposals, set out in a consultation paper last month, would cap commissions on a range of insurance products and tighten limits on insurers’ expenses. The regulator says the changes are designed to reduce policy costs and curb mis-selling, a persistent concern in a market that still depends heavily on agents, brokers and banks to push sales.
Seth told reporters on the sidelines of an event in Mumbai that there was “absolutely no intention” of causing disruption for any market participant. He said he had met insurers and distributors this week, and that their main requests centred on more flexibility for smaller firms, lower-value policies and a clearer transition path. According to Seth, nobody has challenged the problems the regulator has identified or the broad direction of the reforms.
The timing remains under discussion. Seth said the rules could begin on January 1 or April 1 next year, depending on feedback from the industry, and that a draft regulation will follow the consultation phase, giving stakeholders another chance to weigh in. Brokers have asked for the October 25 deadline for comments to be pushed back to late December, but Seth stopped short of backing an extension and urged participants to respond on time.
The reform push comes as India seeks to modernise a sector that generated about $124.4 billion in premiums in fiscal 2025 and ranks as the world’s 10th-largest insurance market. The changes also follow New Delhi’s decision this year to open insurance to 100% foreign ownership, while regulators try to rein in costs that have climbed since commission limits were removed in 2023. Industry reports say brokers fear the measures could upend established business models and threaten jobs, but the regulator appears determined to proceed, albeit cautiously.
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