The Insurance Brokers Association of India (IBAI) has written to the Prime Minister and the Finance Minister opposing the insurance regulator's proposed overhaul of how insurance distributors are paid, according to a Reuters report published by Business Standard on 6 October 2026. The brokers' body has asked for a meeting with both and wants the current rules to continue until their scheduled review in 2028.
The IRDAI proposal
On 23 September 2026, the Insurance Regulatory and Development Authority of India (IRDAI) released a consultation paper on recalibrating the economics of insurance distribution. It proposes more than 30 commission caps across products and sales channels, and a one-third reduction in insurers' overall expense limit, according to Business Today.
Commission is the payment an insurer makes to an agent, broker, bank or other intermediary for selling a policy. Under the proposal, commission levels would be linked to how complex a product is and how much effort it takes to sell. Mandatory covers such as third-party motor insurance would earn little or no commission. The regulator's stated aim is to reduce the cost of insurance for policyholders.
IRDAI's case rests on data showing payouts to distributors rising faster than premiums. Insurance Business reported that between 2022-23 and 2024-25, general insurers' premiums through brokers grew 37% while commissions to brokers grew 173%. Stakeholders can send comments until 25 October 2026.
What the brokers say
In its letters, IBAI argued that the caps would move money from distributors and insurers' staff to insurance company owners, with no rule requiring the savings to be passed on to policyholders. It estimated that at least 1 million jobs could be at risk over five years, not counting salaried employees of insurers. It also warned that tighter caps could bring back practices such as disguising extra commission as "marketing fees".
The association said a complete change in distribution rules so soon after the government allowed 100% foreign direct investment in insurance would signal regulatory uncertainty. It has asked that hard caps not be imposed without a published impact assessment covering policyholders, jobs, public sector insurers and foreign investment.
Earlier, IBAI had argued that brokers help customers compare products and handle claims. It cited figures showing brokers sponsored 14.81 lakh of the 27.18 lakh point-of-sale persons (POSPs) registered as of 31 March 2025, many of them in smaller towns. IBAI represents 798 licensed brokers.
What happens next
The consultation is still open, and no final regulation has been issued. IBAI has said it will submit its detailed response by the 25 October deadline. Any final rules would come only after IRDAI reviews the comments it receives. Until then, existing commission and expense rules continue to apply.