India insurance regulator to oversee smooth transition to new commission rules, chairman says
India's insurance regulator, the IRDAI, plans to implement reforms for insurance sales to improve the market. Proposed changes include capping commissions and tightening expense limits to reduce costs and mis-selling. Ajay Seth stated the intention is to avoid disruption within the industry during this transition period. Insurers and distributors have expressed concerns regarding the potential…
India's insurance regulator, the Insurance Regulatory and Development Authority of India (IRDAI), aims to ensure a smooth transition to new commission rules, as confirmed by its chairman Ajay Seth on Thursday. The regulator proposed capping commissions on various insurance products and tightening insurers' expense limits in a bid to lower policy costs and prevent mis-selling.
Seth emphasized that there is no intention to disrupt insurers or distributors during the transition. He met with industry stakeholders this week and received requests for relaxations for smaller players and low-value policies, along with a transition path. However, no objections have been raised regarding the identified problems or the overall direction of the reforms.
The proposed rules, which could take effect from January or April 1 next year depending on industry feedback, are part of IRDAI's efforts to reform the sector following the country's decision to allow 100% foreign ownership. The rules aim to target costs that have risen since commission limits were removed in 2023.
With the world's 10th-largest insurance market generating $124.4 billion in premiums in fiscal 2025 across around 60 insurers, including Prudential and Sun Life Financial, stakeholders are urged to submit their comments on the draft regulation by the consultation deadline, which brokers have sought to push to late December. Seth did not commit to extending the deadline and emphasized the importance of submitting comments on time.
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