Insurance Brokers Oppose IRDAI Reforms, Project 70% Revenue Loss

The Insurance Brokers Association of India (IBAI) expressed concerns over the Insurance Regulatory and Development Authority of India's (IRDAI) proposed norms, which could result in a 60-70% revenue decline for the insurance broking industry. With over 83 lakh individuals employed in the distribution sector, job losses of up to 10 lakh are anticipated due to the economic impact of the proposed policies.

The IRDAI's recommendation of product-wise commission caps for distributors and tighter limits on insurers' expenses aims to control excessive commissions, but the industry body warns that these changes could negatively impact small businesses and MSMEs. The IBAI also criticized IRDAI's data, claiming that the rise in commissions between FY23 and FY27 was not a result of inflation but rather a reclassification of expenses.

The association highlighted that policyholders received ₹84.4 in non-life insurance claim payouts for every ₹100 paid, exceeding the global average of 72-75%. The IBAI is willing to collaborate with IRDAI to address specific market issues, such as misselling or disproportionate remuneration, and has submitted letters to the Prime Minister's Office and Finance Ministry regarding the matter.