India's insurance regulator has put out a draft proposal that would bring back limits on how much insurers can pay agents, banks, brokers and other intermediaries for selling policies. The paper, titled Recalibrating Economics of Insurance Distribution, is open for public comments until 25 October 2026. It is only a proposal for now: nothing changes for existing policyholders unless IRDAI issues final rules.
Reports differ slightly on when the paper was released. Business Today dates it to 23 September 2026, and the brokers' association had already responded by 29 September, so it came out in the last week of September.
What IRDAI is proposing
The paper sets out more than 30 separate commission caps, varying by product and by sales channel. According to Business Standard, the proposed limits include:
- Individual health insurance: 20% of premium, and 15% for corporate channels. Business Standard puts the current level at up to 24%. MediaNama reports the first-sale cap as 20% for agents and 15% for other distribution entities.
- Term life insurance: 30% for individual sellers and 25% for corporate channels, against up to 51% today.
- Motor insurance: between 0% and 15%, against about 26% today.
- Savings-type life products: between 5% and 25%, against 14% to 37% today.
Separately, the regulator wants to tighten "expenses of management" (EoM), which is the total an insurer may spend on running its business, including commissions, as a share of premium. MediaNama reports proposed targets of 25% and then 20% for general insurers, and 15% and then 12.5% for life insurers, phased over about five years. These limits were loosened in 2023, when product-level commission caps were removed.
Why the regulator says it is acting
IRDAI's case is that commissions have grown much faster than the business itself. As summarised by Mint, life insurance commissions rose nearly 126% between FY23 and FY25 while premiums grew about 27%. For non-life insurers, commissions rose 173% against premium growth of 37%. Business Standard also reports that motor commissions grew 259% over the same period even though motor pricing is regulated.
The paper also includes a customer-facing proposal. Insurers would have to show product features, pricing and performance without first asking visitors for personal details such as a phone number. MediaNama reports that the draft treats such data-gating as a "dark pattern".
The industry pushback
The Insurance Brokers Association of India (IBAI), which says it represents 798 licensed brokers, has opposed broad caps. It argues they could cut jobs, make it harder to serve customers in smaller towns, and leave independent brokers paid less than tied agents. IBAI has asked IRDAI to keep the 2023 framework and to limit caps to areas such as credit-linked sales, where a loan customer may be pushed into buying a policy. It also wants a published impact assessment before any rule is finalised.
What it means for health policyholders
Commissions are built into the premium you pay, so lower distribution costs could, in principle, leave room for lower prices or better benefits. IRDAI has not said premiums will fall, however, and brokers argue the savings may not reach customers. If the dark-pattern rule is adopted, it would become easier to compare health plans online without sharing your contact details. Anyone can send comments to IRDAI before the 25 October deadline. For existing policies, renewal terms are not affected by this draft.