The Insurance Brokers Association of India (IBAI) has raised concerns about the Insurance Regulatory and Development Authority of India’s (IRDAI) proposed changes to insurance distribution rules, saying the new framework could have implications for policyholders, employment and the expansion of insurance services.
IRDAI released its consultation paper, titled “Reforms for Recalibrating Economics of Insurance Distribution”, on September 23, 2026. The regulator has proposed changes aimed at reshaping commissions and insurers’ expense limits, with stakeholder comments invited until October 25, 2026.
IBAI, which represents 798 licensed insurance brokers in India, said it supports the regulator’s objectives of improving policyholder protection, transparency and measures against mis-selling. However, the association has expressed reservations about how the proposed changes would regulate the economics of insurance distribution.
IBAI Raises Questions Over Commission Caps
One of the main concerns raised by IBAI is the proposal for more than 30 commission caps covering different insurance products and distribution channels. The consultation framework also proposes a phased reduction in insurers’ Expense of Management limits.
According to IBAI, these changes could affect customers who choose to use brokers to compare policies, negotiate coverage and receive assistance with claims. The association pointed out that insurance brokers are required to work in the interests of their clients.
IBAI also referred to data cited in the consultation process, saying 69% of complaints against general insurers relate to claims, while 63% of complaints on the regulator’s portal are decided in favour of customers. The association argued that reducing the role or remuneration of brokers appointed by customers could affect the support available to policyholders during the claims process.
Concerns Over Jobs and Insurance Reach
The association has also raised concerns about the possible impact on employment, particularly across smaller cities and towns.
IBAI said that as of March 31, 2025, insurance brokers sponsored 14.81 lakh of the country’s 27.18 lakh point-of-sale persons. Many of these workers are self-employed and operate in Tier-2 and Tier-3 markets.
The association argued that commission levels below the cost of servicing customers could make it difficult for intermediaries to maintain distribution networks in these areas. It also warned that lower permissible expenses could eventually put pressure on insurers’ sales, servicing and claims-related workforce.
IBAI Questions Interpretation of Commission Data
IBAI has also challenged the way some of the commission data is interpreted in the consultation paper.
The association said the paper shows that total expenses of management for general insurers declined from 28.2% of premium in FY2022-23 to 26.5% in FY2024-25, even as premiums increased by around 13% annually.
According to IBAI, part of the reported rise in commissions was linked to the reclassification of payments that had previously been recorded under other expense categories. The association said this change has also been acknowledged in the consultation paper.
IBAI Seeks Targeted Changes
IBAI has called for the continuation of the 2023 Expense of Management framework, while suggesting that calculation and compliance rules could be strengthened where necessary.
The association has also proposed restricting commission caps to areas such as credit-linked insurance and other situations where customers have limited choice. It has suggested that commercial and large risks should be excluded from such limits.
IBAI has further asked IRDAI to conduct a regulatory impact assessment before finalising new regulations. The association said it will submit its detailed response to the regulator by October 25, 2026.
IBAI said its position is not against regulatory reform, but that the changes should, in its view, strengthen policyholder interests while maintaining insurance distribution networks and access to insurance services.
Disclaimer: This article is based on the IRDAI consultation proposals and concerns raised by the Insurance Brokers Association of India. The proposed changes are subject to the ongoing consultation process and may be revised before any final regulations are introduced.