Overview
- IRDAI published a consultation paper on September 23 that would reintroduce fixed commission ceilings and set phased Expenses of Management limits to cut distribution costs.
- The draft quantifies sharp rises in payouts, saying life first‑year commissions averaged 14%–51% and peaked at 81% in some categories while some health commissions reached as high as 93%.
- Specific proposals include life EoM ceilings of 15% of GDPI in two years and 12.5% in five years, a 20% GDPI cap for general insurance in five years, steep cuts to first‑year and renewal commissions, and a 2% cap on single‑premium credit‑life commissions.
- Markets reacted immediately with several insurer stocks falling as much as about 10% and analysts warning the cuts could strain bancassurance and high‑cost distributors while agency‑heavy or lower‑cost firms may fare better.
- The consultation is not final and will take public comments until Oct 25, 2026, after which IRDAI may finalise rules that the regulator says are meant to shift competition toward pricing and product quality and protect customers from high premiums and churn.