Voicing concerns over the impact of the reforms IRDAI is proposing to norms governing distribution, commissions and expenses, bodies representing insurance brokers and Life Insurance Corporation of India (LIC) agents have urged the insurance regulator to consider the likely repercussions on the jobs and livelihoods.

Cost efficiency should not be pursued in a manner that reduces the number of active agents or makes the profession economically unsustainable. The primary objective of distribution reform should ultimately be to increase insurance coverage and improve policyholder outcomes, said the Life Insurance Agents’ Federation of India (LIAFI) in its responses to IRDAI.

Any substantial reduction in the earnings potential of agents could discourage new entrants and adversely affect the existing agency force, Secretary General B. Markandeyulu said.

The federation highlighted the role of LIC agents in strengthening the insurance movement in India and said the agency channel remains crucial for expanding insurance access. LIAFI represents several lakh agents of the state-owned insurer.

Favour strict action against frauds

While supporting strict action against deliberate fraud, unethical practices and genuine cases of mis-selling, LIAFI said “regulatory measures should differentiate between intentional misconduct and genuine errors or situations beyond an agent’s control.”

The federation said commissions are the primary source of livelihood for individual agents and should be viewed as fair compensation for professional services rendered, rather than merely as a cost to be reduced. It added that, with employment generation being a national priority, the regulatory framework should ensure that insurance agency remains an economically viable profession.

Demand grandfathering provisions

Any change in commission structures must be based on a comprehensive assessment of the actual services, responsibilities and cost involved. “We request that appropriate grandfathering and transition provisions be incorporated, particularly in relation to existing business and continuing servicing responsibilities,” Mr. Markandeyulu said.

Expressing concerns over the consultation paper ‘Recalibrating economics of insurance distribution’ that IRDAI has opened for public comments, the Insurance Brokers Association of India (IBAI) said it supports the regulator’s stated objectives of policyholder protection, transparency, curbing mis-selling and wider insurance coverage. But the more than thirty separate commission caps by product and channel, together with a one-third cut in insurers’ overall expense limit will harm the very policyholders it seeks to protect.

Reduce reach to small towns

“Insurance is a people business. The [consultation] paper will reduce the people who reach customers in small towns and the people who service them inside insurers, and it contains no mechanism to ensure that the savings reach policyholders as lower premiums,” the IBAI said, attributing it to an unnamed spokesperson.

In a release, IBAI, which represents 798 licensed insurance brokers, said it will file its detailed response by October 25 and urge IRDAI to retain the 2023 expense-of-management framework, confine caps to coerced-choice sales, require premium refunds to customers where such segments run low claims ratios and publish an impact assessment before drafting regulations.

Insurance regulator IRDAI has approved amendments mandating insurers to prepare and present financial statements in accordance with applicable Indian Accounting Standards effective April 1, 2026.

The implementation of Ind AS will be applicable to all categories of insurers — life, general, stand alone health insurers and reinsurers. The amendment sets out the regulatory framework governing the recognition, measurement, presentation and disclosure of financial statements under Ind AS.

Introduction of Ind AS aims to enhance consistency, transparency and comparability in financial reporting across the insurance sector, in alignment with globally accepted standards, IRDAI said on Monday, announcing approval for the Insurance Regulatory and Development Authority of India (Actuarial, Finance and Investment Functions of Insurers) (Amendment) Regulations, 2026.

The regulations provide for parallel reporting for a period of two years, or as specified by IRDAI, comprising financial statements prepared in accordance with Ind AS alongside financial information under the existing accounting framework. This is intended to enable insurers to stabilise processes and controls, while allowing stakeholders to understand and assess the impact of the new accounting framework, the regulator said.

For insurers facing challenges in immediately shifting to Ind AS, a provision has been made to grant forbearance for one-year. During this period, such insurers will continue to submit Ind AS based financial information also to the Authority.

The Institute of Chartered Accountants of India (ICAI) and the Institute of Actuaries of India (IAI) have welcomed the adoption of Ind AS and expressed their readiness to support insurers, auditing professionals and actuaries. IRDAI said the framework has been developed after extensive stakeholder consultations, including consideration of public comments on the exposure draft and engagement with insurers and industry professionals.