India’s insurance regulator is weighing expense and commission limits after a corporate-agent sample showed distributor remuneration growing far faster than new premiums, putting sales costs and policyholder protections in focus.
The Insurance Regulatory and Development Authority of India (IRDAI) issued a two-part consultation paper on Sept. 23 proposing changes to insurers’ expense ceilings and distributor commissions. The regulator says the measures aim to improve policyholder outcomes, competition and operational efficiency.
The sample covered about 92% of premiums procured through the corporate-agent channel. From FY23 to FY25, new-business premiums rose 28%, while distributor remuneration climbed 125%. IRDAI said remuneration was nearly 27% of first-year premium; extra rewards and incentives equaled 30% to 60% of base commission.
The proposal would count both direct and indirect payments toward commission limits, with ceilings varying by product, sales channel, complexity and effort. It also calls for annual reductions in expense limits starting in FY2027-28. For general insurers, IRDAI proposes basing the calculation on gross direct premium income (GDPI) instead of gross written premium (GWP).
Mandatory motor third-party insurance is one area the paper highlights. IRDAI said average commission for that cover rose from 4.3% in FY23 to 22% in FY25. For third-party cover on new vehicles, the proposal would set a zero commission limit for distribution entities and a 2.5% limit for agents and associates.
IRDAI reported receiving more than 650 comments by Oct. 24. The regulator’s extension of the consultation deadline moved the cutoff from Oct. 25 to Oct. 31. In an interview with Moneycontrol, IRDAI Chairman Ajay Seth said, “A commission limit is a maximum, not an entitlement.”
IRDAI presents policyholders as the intended beneficiaries, while the proposed limits would constrain insurers’ expenses and distributors’ commissions. The paper does not specify a premium reduction; any effect on customer costs or sales channels will depend on the final rules and how insurers and distributors respond. The consultation closed Oct. 31, and IRDAI said it would consider submissions in its next review of the proposals.
