The Reserve Bank of India (RBI) will send its comments to the insurance regulator on IRDAI's draft proposals to overhaul the commissions insurers pay to agents, banks, brokers and other distributors. RBI Governor Sanjay Malhotra said so at the press conference after the monetary policy announcement on 7 October 2026.
What the Governor said
According to Business Standard, Malhotra said the RBI had not yet settled its position on the draft and would share its comments with IRDAI, noting that it is only a draft and that IRDAI will hear all stakeholders. Asia Insurance Post, reporting the same press conference, said he described the reforms as aimed at consumer interest, lowering costs and preventing mis-selling, and characterised his remarks as backing for the plan. The RBI has not issued any formal document on the subject.
The RBI's view matters because banks are among the largest sellers of insurance in India through bancassurance (selling insurance policies at bank branches as corporate agents).
What IRDAI has proposed
IRDAI released a consultation paper titled "Recalibrating the Economics of Insurance Distribution" in September 2026. It proposes commission limits that vary by segment, line of business, sales channel, product complexity and the effort needed to sell and service a policy, along with product-level caps and lower limits on insurers' expenses of management. Under the proposals, mandatory covers such as third-party motor insurance would carry little or no commission. IRDAI says the aim is to bring down insurance costs for policyholders.
Data cited from IRDAI's paper, as reported by Business Standard:
- Banks accounted for nearly ₹68,000 crore of the sampled corporate agency premium.
- In FY25, banks with multiple insurer tie-ups paid an average commission of 33%, against about 13% for banks with a single tie-up.
- In life insurance, average commissions to agents and corporate agents ranged from 27% to 61% of first-year premium.
Stakeholders can send feedback until 25 October 2026.
Brokers' objections
The Insurance Brokers Association of India (IBAI) has written to the Prime Minister and the Finance Minister opposing the caps, according to a Reuters report carried by Business Standard on 6 October. IBAI estimates that at least 1 million jobs could be at risk over five years. It argues the money saved would go to insurers' owners rather than policyholders, and has asked for the current framework to stay until its scheduled review in 2028, and for any hard caps to be preceded by a published impact assessment.
What happens next
The proposals are still a draft. IRDAI will review the comments it receives, including the RBI's, before deciding on a final framework. No change applies to existing policies or to commissions today.