Insurance distribution costs have risen sharply. From FY23 to FY25, motor premiums grew 34%, while distributor commissions jumped 259%, raising concerns over affordability and efficiency.
A New Distribution Architecture
IRDAI proposes three categories: Insurance Distribution Entities, Insurance Distribution Persons and Market Infrastructure Institutions, creating clearer accountability and disclosure requirements.
What Changes for Banks & NBFCs?
Banks and NBFCs would not be allowed to make insurance compulsory for loan approval. Volume-linked and reward-linked incentives for insurance-selling employees could also face restrictions.
What It Means for Insurers
Insurers could face lower distribution costs, tighter expense controls and mandatory cost audits. The changes may also encourage greater investment in direct, digital and rural distribution.
Growth Beyond Trading
Lower commissions and tighter rules could pressure broker and digital-platform economics. IRDAI also proposes greater seller accountability and restrictions on certain misleading “dark patterns.”
What Happens Next?
The proposals are not final regulations. Stakeholders can submit feedback until October 25, 2026, while key details such as final commission limits and implementation timelines remain open.
IRDAI’s reforms could significantly change the economics of insurance distribution. Read the full blog for the complete proposals, sector-wise impact and what happens next.