New Delhi .The Insurance Regulatory and Development Authority of India has made several proposals regarding changes in the sales system and commission model of motor insurance. The aim of these offers is to provide customers with more options and clearer pricing when purchasing insurance. Currently, while buying a new car or bike, customers often take insurance from the same dealer from where the vehicle is purchased.
In the current system, it is not easy for every customer to compare the policies and their prices of different insurance companies. While reviewing this system, the regulator has considered many aspects related to distribution and commission of motor insurance.
Concern has also been raised in the proposal regarding the commission received on the sale of motor insurance. According to available data, commission in different cases can reach 13 to 50 percent, while the average is said to be around 24 percent. In some distribution channels related to new and used vehicles, this commission is said to be around 24 percent and in some cases up to 31 percent.
In FY 2025, premium of about Rs 29,000 crore was collected through these means, while about Rs 7,050 crore went as commission. The proposal raises questions about whether such high commission costs are justified in relatively simple motor insurance products.
It is proposed to make motor insurance products available on digital platforms to provide channels other than dealers to customers. Market infrastructure institution based platforms and digital mediums related to insurance can play a role in this. With such options the customer will be able to directly access different policies.
As per the proposal, dealers may have to clearly display the option of such digital platform and the QR code. This will inform the customer that it is not necessary to take insurance only through the dealer.
Emphasis has also been laid on transparency in the proposal regarding sale of insurance along with vehicle loan. Around 16 percent commission has been seen in cases related to banks and NBFCs. In such cases, emphasis has been laid on giving clear information about the source and price of insurance to the customer.
It is also proposed to review the commission system in insurance of old vehicles. Despite many dealers having service and repair facilities, motor insurance service providers are said to earn an average commission of around 12 percent on old vehicle insurance.
Important changes are also proposed regarding cashless repairs. Cashless repair will not be denied merely because the customer has not purchased the insurance from the same dealer. If the facility is available in the policy, its benefit can also be availed on the basis of policy taken from another insurer.
It is also proposed to ban agreements related to additional incentives between original equipment manufacturers and insurance distribution institutions. Whereas, lower commission arrangements have been considered for third-party insurance and simple motor insurance products.
However, these changes are not yet the final rules. Suggestions and objections have been sought from the concerned parties till 25 October 2026. After this, the further process will be decided after considering the suggestions received. Therefore, at present, immediate change in the existing system of motor insurance cannot be considered.