{
  "id": 9706414,
  "title": "IRDAI Plans Insurance Distribution Overhaul, Commissions And Mis-Selling Face Tighter Rules",
  "url": "https://urgent.news/2026/09/25/irdai-plans-insurance-distribution-overhaul-commissions-and-mis",
  "topic": "finance",
  "section": "Finance & Markets",
  "published": "2026-09-25T04:38:40.000Z",
  "source": {
    "name": "Free Press Journal",
    "slug": "free-press-journal",
    "url": "https://www.freepressjournal.in/business/irdai-plans-insurance-distribution-overhaul-commissions-and-mis-selling-face-tighter-rules"
  },
  "original_language": "en",
  "account": "The Insurance Regulatory and Development Authority of India (IRDAI) is proposing comprehensive changes to the insurance distribution system, with a focus on curbing high commissions, hidden payouts, and mis-selling practices. These proposed reforms aim to reduce costs for policyholders and promote a more transparent distribution structure.\n\nIRDAI’s consultation paper, \"Recalibrating Economics of Insurance Distribution,\" outlines a simpler three-tier distribution model. This new framework would also impose stricter expense and commission rules on insurers and large distributors. Promotional expenses, brand fees, rewards, and other additional payments could push distributor payouts 30% to 60% above base commissions. Insurers and major distributors would be required to disclose their commission policies in a clear and accessible manner.\n\nIRDAI also proposes bringing both direct and indirect remuneration under the commission definition. Volume-linked and reward-linked incentives for bank and Non-Banking Financial Company employees selling insurance could be prohibited. The regulator intends to link each policy to the identity of the individual seller, making mis-selling information publicly available. Insurers could also reclaim commissions if they determine mis-selling has occurred.\n\nIRDAI suggests commission caps for health insurance, with first-time commissions ranging from 15% to 20% and renewal and porting commissions limited to 5% to 10%. First-year commissions for distribution entities could fall between 5% and 20%, depending on the policy's tenure. Mandatory products, such as motor third-party insurance, may see little or no commission. Distributor compensation could become more closely tied to long-term policy retention.\n\nLife insurers' expense limits might evolve into a company-wide framework connected to Gross Direct Premium Income. The ceiling is set at 15% within two years and 12.5% within five years. General insurers could see their expense of Management (EoM) limits decline from 30% of Gross Written Premium to 20% of domestic Gross Direct Premium Income (GDPI) within five years.\n\nThe IRDAI notes a significant disparity between premium growth and distributor remuneration. Non-life insurers experienced a 10% premium increase in August, while new business premium through sampled corporate agents rose 28% from Rs 63,000 crore to Rs 80,000 crore between FY23 and FY25. Distributor remuneration surged 125% from Rs 9,580 crore to Rs 21,600 crore during the same period. General insurance broker commissions increased 173% to Rs 17,348 crore, while routed premiums grew by only 37%. Bancassurance partnerships also saw substantial payouts, with multiple tie-ups averaging 33% of premiums, reaching up to 72% in some instances. Group Credit Life payouts reached up to 45% in FY25, raising concerns about customer choice, loan-linked insurance, and compulsory product bundling.",
  "summary": "New Delhi: The Insurance Regulatory and Development Authority of India (IRDAI) has proposed sweeping changes to insurance distribution, targeting high commissions, hidden payouts and mis-selling while seeking to lower costs for policyholders. The proposals are part of IRDAI’s consultation paper, “Recalibrating Economics of Insurance Distribution”, which envisages a simpler three-tier distribution…",
  "key_points": [],
  "editors_take": null,
  "illustration": null,
  "coverage": {
    "outlets": 1,
    "also_reported_by": []
  },
  "ai_generated": true,
  "disclaimer": "Summaries, key points and the editor’s take are written by software from other outlets’ reporting and may contain errors — always check the linked original."
}