The Insurance Regulatory and Development Authority of India (
Feedback on these proposed rules is open until October 25, 2026 before the final regulation takes shape.
Key Proposed Changes
Lower Expense of Management (EoM) Caps
IRDAI proposes a phased reduction in operational spending limits for insurers to make insurance products more cost-effective:
Life Insurers: Company-level EoM cap brought down to 15% of Gross Direct Premium Income (GDPI) within 2 years, and 12.5% within 5 years.
General Insurers: EoM cap reduced from 30% of Gross Written Premium (GWP) to 20% of domestic GDPI over 5 years.
Return to Product & Channel-Specific Commission Caps
After removing commission caps in 2023, IRDAI plans to bring them back with granular limits linked to product complexity and distribution effort:
Life Policies (≥10-yr term): First-year commissions capped at 20% for web aggregators/brokers and 25% for agents.
Spreads payouts across the policy term rather than high upfront commissions. Health Insurance: First-year commission capped at 15% for distribution entities and 20% for agents.
Renewal commissions limited to 5% and 10%, respectively. Motor Insurance: Commission on mandatory third-party motor cover for new vehicles slashed to 0% for corporate entities and 2.5% for agents.
Credit-Linked Products: Strict 5% commission cap on policies bundled with loans or bank credit.
Anti-Mis-Selling Measures & Consumer Safeguards
No Forced Bundling: Banning compulsory bundling of insurance policies with loans, credit cards, or bank products.
Banning Aggressive Incentives: Banning volume-based or target-linked non-monetary rewards for bank and NBFC employees selling insurance.
Commission Claw-backs & Transparency: Full public disclosure of commission structures and mandatory claw-back of commissions if a policy is proven to be mis-sold.
Ban on Dark Patterns: Banning misleading digital prompts, hidden checkboxes, or pre-selected options on online aggregation websites.
Rural & Small-Town Incentives
To offset lower commission structures, IRDAI proposes an additional 10% to 20% commission bonus for policies sourced from smaller towns (population under 10 lakh) and rural regions (population under 50,000).
Sector & Stakeholder Impacts
| Stakeholder | Impact |
| Policyholders | Positive: Lower distribution costs can lead to higher returns on life savings products, reduced premium structures over time, less forced bundling at banks, and protection against deceptive digital practices. |
| Insurance Web Aggregators & Brokers | Negative: Digital platforms and broking businesses (e.g., Policybazaar/PB Fintech) face significant top-line compression due to lower commission limits and digital channel caps. |
| Bancassurance (Banks & NBFCs) | Negative: Ban on target-based employee perks and lower commission ceilings on credit-linked insurance products will squeeze non-interest fee income for banks. |
| Insurers (Life & Non-Life) | Mixed: Margins will face short-term pressures during transition, but tighter EoM structures force long-term operational efficiency and healthier capital structures. |
| Ground Agents & Small Towns | Mixed: Agents selling low-ticket policies (e.g., two-wheeler insurance) may find lower commissions unsustainable, though rural incentives aim to cushion this impact. |
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