Insurance commission norms not intended to disrupt business models: Irdai chief
The intention behind the proposed commission norms is not to disrupt any business model or any particular market segment, Insurance Regulatory and Development Authority of India (Irdai) chairman Ajay Seth said on Thursday.
“There is absolutely no intention that there should be a disruption for any market segment or any individual. No, disruption must not be there. At the same time, everybody moves towards better efficiency,” Seth said at the sidelines of the Samvaad India Open Finance Summit 2026, organized by Sahamati, the self-regulatory organization for account aggregators.
The insurance regulator issued a consultation paper on 23 September, proposing an overhaul of insurance distribution to reduce distribution costs and commissions and giving policyholders greater choice in buying insurance.
The proposals include tighter expenses of management (EoM) limits, product-level commission caps, a ban on compulsory bundling of insurance with loans by banks and non-banking financial companies (NBFCs), and changes to motor insurance distribution. The deadline for feedback on the paper is 25 October.
Insurance intermediaries such as brokers and agents have been the most vocal about how the proposed norms could hurt their business model and subsequently lead to job losses across the industry. The Insurance Brokers’ Association of India (IBAI), an industry body, has also sought an extension of the deadline to December 2026to submit its feedback.
“This concern about loss of your livelihood, to our mind, that is sort of misplaced. The intent is not to disrupt any business model,” Seth said, adding that the idea is to undertake an “orderly transition to a better system” based on economic and business logic shared through the suggestions.
“There are enough provisions, enough suggestions wherein more business opportunities can be created within the insurance sector and even beyond the insurance sector,” he said, adding that the regulator is keenly considering all feedback and suggestions being received to ensure the same.
Extension unlikely
However, Seth hinted that Irdai is unlikely to extend the deadline for submitting feedback, saying that he has been engaging with and encouraging all stakeholders to submit their suggestions within the timeline, given that there will be scope for another round of discussions once the draft norms are issued.
“There will be another round coming up because this is a consultation paper. Thereafter, the draft regulations will have to come. There will be an exposure draft, so everybody will get time on the second round as well if something more needs to be done,” he said, adding that this will allow Irdai to consider all the feedback and make an informed decision.
So far, the feedback from industry stakeholders has centred on the need to differentiate between larger traditional players and smaller and newer insurers, as well as distribution players, and on how the norms could impact policyholders, Seth said.
Meanwhile, interest from foreign players in the insurance space has been strong, both for greenfield and brownfield investments, following the opening up of FDI limits, Seth said, adding that the regulator has received applications for both life and general insurance companies.
Seth also highlighted that compliance with the transition to the Ind-AS accounting framework is on track, and the regulator is maintaining its guidance to roll out the risk-based capital (RBC) regime by April 2027.
“IFRS (IndAS) is a different way of valuation itself. So, that is a heavy step. Having taken the heavy step, thereafter, there should be an efficient application of capital. That is in everybody’s interest. So, RBC transition should be smooth,” he said.
