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 proposed an overhaul of norms governing insurance distribution, commissions and expenses, a development that turned the spotlight on shares of insurers and intermediaries on Thursday, particularly PB Fintech and Turtlemint Fintech.

Opening consultation paper ‘Recalibrating economics of insurance distribution’ for public comments, the Insurance Regulatory and Development Authority of India (IRDAI) on Wednesday said it is outlining a comprehensive framework of reforms around insurance distribution, structure, market conduct, transparency and leveraging digital infrastructure, besides the expenses and commissions.

On the commission framework, IRDAI said instead of a uniform approach, commission limits would take into account the segment, line of business, distribution channel, product complexity and the effort involved in selling and servicing the product. A system of rewards, over and above normal commission limits, for sale of products in under-served areas is proposed.

Cost audits and safeguards against indirect payments are also proposed to ensure greater accountability for actual cost of distribution. Insurers and large distribution entities would be required to disclose commission policies and structures in a simple and accessible manner, while specified commercial policies would carry commission disclosures. This would enable customers to be aware of the distribution costs built into the pricing.

The proposed reforms seek to strengthen safeguards against compulsory bundling of insurance with other financial products and curb mis-selling through greater accountability. Measures include linking the identity of the individual distributor to every policy sold, public disclosure of mis-selling incidents and commission claw-backs in proven cases of mis-selling.

Tracking dark patterns and making relevant performance information publicly available to strengthen market discipline figures in the proposal.

The Expense of Management (EoM) framework is proposed to be recalibrated through lower limits with a phased glide path. The reduction in EoM is intended to lower the overall cost of insurance and expand the risk pool available in general insurance and enhancing returns to policyholders in life savings products.

IRDAI said the proposed distribution architecture is guided by the principle of “same structure, same functions, same norms.” It seeks to replace the existing complex and fragmented architecture with three broad categories of distribution entities namely Insurance Distribution Entities, Insurance Distribution Persons and Market Infrastructure Institutions.

Simpler registration, lower entry and capital requirements, reduced regulatory fees and greater flexibility for distributors to undertake insurance as well as other financial and non-financial activities are envisaged in the consultation paper.

On the proposed distribution reforms, Generali Central Life Insurance MD and CEO Alok Rungta said “we are currently evaluating the proposals to understand their implications and would be seeking further clarity as the consultation progresses.”

Emkay Research said the proposals could radically cut commissions across products and potentially redefine the insurance business model, including completely destroying some business models. The reduction in commission would make insurance distribution an unviable business. It, however, expected the final regulations to be less stringent.

The Insurance Regulatory and Development Authority of India (IRDAI) has imposed a penalty of ₹1 crore on IndusInd Bank for violation of norms governing corporate agents.

The corporate agent, IndusInd Bank, failed to establish a dedicated, policyholder-facing grievance redressal framework, improperly relying on generic banking mechanisms rather than providing insurance-specific IVR or website channels. Further, after promising compliance during regulatory proceedings, it submitted representations and screenshots of a grievance portal that, upon test verification by the Authority, proved non-functional and failed to generate complaint acknowledgments, IRDAI said in a release on Friday.

The regulator directed IndusInd Bank to pay a penalty of ₹1 crore under Section 102 of the Insurance Act, 1938, for violation of Regulation 20(1) of the IRDAI (Registration of Corporate Agents) Regulations, 2015.

The action follows an onsite inspection conducted during June 2023 and subsequent enforcement proceedings. IRDAI said it has also issued cautions and advisories in respect of certain other compliance deficiencies, including deficiencies in renewal notices, disclosure of regulatory actions to the Authority and prescribed disclosures on the Corporate Agent’s website regarding its registration and role as an insurance intermediary.

As many as 11 insurance companies have begun the transition to Indian Accounting Standards (Ind AS) from the current financial year (FY27), the Insurance Regulatory and Development Authority of India (IRDAI) said on Wednesday.

Among these, SBI General Insurance, Niva Bupa Health Insurance and Star Health and Allied Insurance have submitted their financial numbers for the first quarter of FY27 under Ind AS, marking a key milestone in the sector’s shift to the new accounting framework.

The other insurers that have started the transition include life insurers Acko and Tata AIA, general insurers Acko, Kiwi and ECGC; health insurers Aditya Birla and Galaxy; and foreign insurance branch XL Insurance Company SE-India Reinsurance Branch (Axa XL).

IRDAI said it is continuing to facilitate the smooth and consistent implementation of Ind AS across the insurance sector. The regulator is also closely monitoring insurers that have been granted forbearance and are scheduled to adopt Ind AS from FY28.

The regulator said it is engaging with these insurers on an ongoing basis, with implementation-related challenges and delays being discussed and appropriate sensitisation measures being undertaken to keep the transition on track for FY28.

The adoption of Ind AS is expected to strengthen financial reporting and governance in the insurance sector while providing stakeholders with more transparent and meaningful information on insurers’ financial performance and position, IRDAI said.

The regulator will also work closely with the industry and leverage the Joint Expert Group, comprising representatives from IRDAI, the National Financial Reporting Authority (NFRA), Securities and Exchange Board of India (SEBI), Institute of Chartered Accountants of India (ICAI) and Institute of Actuaries of India (IAI), to address emerging issues and facilitate consistent implementation.

The Insurance Regulatory and Development Authority of India (IRDAI) on Tuesday released a consultation paper on the proposed Public Insurance Registry (PIR), describing it as a population-scale, interoperable and non-exclusionary digital public infrastructure (DPI).

The objectives of the PIR are to facilitate growth and inclusion, building trust and transparency, and promoting affordability and financial sustainability. It is significant step towards building a more connected, transparent, efficient and resilient insurance ecosystem, with trusted information serving as a foundation for better protection, innovation and public value, the regulator said.

The proposal, is in line with the objectives of the Sabka Bima Sabki Raksha Act, 2025, draws inspiration from the success and lessons from DPIs in other sectors of Indian economy. It is intended to enable technology, governance and market participation to work together towards wider and deeper financial resilience.

PIR seeks to address information and interoperability gaps by establishing a consistent and authoritative view of insurance records, while enabling appropriate information to remain with the relevant source institutions. It has the potential to lower information barriers, promote competition and enable market participants to differentiate through product innovation, pricing, service quality and customer experience.

It would enable easier product discovery and comparison, a consolidated view of policies across insurers, reduced documentation, improved servicing and claims experiences and easier identification of unclaimed amounts, IRDAI said, fixing September 30 as the last date for submission of comments and feedback.

Welcoming IRDAI’s initiative, PB Fintech Joint Group CEO Sarbvir Singh said “for too long, insurance information has remained fragmented and asymmetric, spread across insurers, intermediaries, and policyholders without a unified, accessible framework. A centralised registry is a logical and necessary enabler – the consultation paper reflects a well-rounded vision for the sector’s future.”

Insurance regulator IRDAI has directed Edelweiss Life Insurance and Pramerica Life Insurance, in separate orders on August 20, not to open new place of business for six months for non-compliance with Expenses of Management (EoM) limits in 2024-25.

“The [two life] insurers were warned for their failure to remain within the prescribed EoM limits and directed not to open any new place of business…”, the Insurance Regulatory and Development Authority of India (IRDAI) said on Friday. The direction follows off-site monitoring, examination of the submissions, by the two insurers, and subsequent enforcement proceedings.

On August 19, it had barred Niva Bupa Health Insurance and Acko General Insurance from opening new branches for six months after finding both insurers exceeded the permissible EoM limits for 2024-25.

In a release, on the latest action, IRDAI said it has laid down strict expense limits for insurers. They are expected to operate within the EoM, which includes operational expenses and distribution costs, to ensure the expenses are managed prudently and the benefits of operational efficiencies are ultimately passed on to policyholders.

During 2024-25, Pramerica Life Insurance incurred expenses of ₹ 747.73 crore as against the allowable expenses under non-participating (including linked policies) segment of ₹609.94 crore, thus resulting in excess expenditure of ₹137.79 crore.

Against the allowable expenses under non-participating (including linked policies) segment of ₹494.09 crore, Edelweiss Life Insurance incurred expenses of ₹558.73 crore. Under participating segment, against the allowable expenses of ₹239.50 crore, the insurer incurred actual expenses of ₹264.81 crore resulting in total excess expenditure of ₹89.95 crore, IRDAI said.

Insurance regulator IRDAI has barred Niva Bupa Health Insurance and Acko General Insurance from opening new branches for six months after finding that both insurers exceeded the permissible Expenses of Management (EoM) limits for 2024-25.

They were “warned for failure to remain within prescribed EoM limits and directed not to open any new place of business for six months” from August 19 order, the Insurance Regulatory and Development Authority of India said on Thursday.

The two insurers were found to have exceeded the permissible EoM limits prescribed under the IRDAI (Expenses of Management, including Commission, of Insurers) Regulations, 2024, following off-site monitoring, examination of their submissions and subsequent enforcement proceedings, it said.

Niva Bupa incurred actual expenses of ₹2,652.12 crore against the allowable expenses of ₹2,403.75 crore, resulting in an excess expenditure of ₹248.37 crore. For Acko General the allowable expenses were ₹650.37 crore, while it incurred actual expenses of ₹985.15 crore, resulting in ₹334.78 crore excess expenditure.

IRDAI said the insurers had been warned for failing to stay within the prescribed limits, adding that EoM include operational and distribution costs. The regulator said insurers must adhere to these limits to curb excessive operating and management expenses and ensure that a reasonable share of the premiums collected is used to provide insurance coverage and settle claims. These limits are intended to protect policyholders from unnecessarily high premiums, promote operational efficiency and safeguard insurers’ financial stability and solvency, it added.

Reaffirming its commitment to ensuring insurers operate within the prescribed regulatory limits on expenses, IRDAI said it would continue to take appropriate supervisory and enforcement action in cases of regulatory non-compliance.

Intimating the stock exchange about the IRDAI order, Niva Bupa said it was evaluating the order and will take appropriate steps to safeguard the interest of stakeholders.

The Insurance Regulatory and Development Authority of India (IRDAI) has directed all insurers, except reinsurers, to submit information every month on their premium income, investment income and claims paid to the government for the purpose of Index of Service Production (ISP).

The details are needed to facilitate data requirements of the Union Ministry of Statistics and Programme Implementation (MOSPI) in preparation of the ISP, the regulator said in a circular to all life, general and health Insurers.

The general and health insurers, excluding reinsurers, are required from July 2026 onwards to provide details of gross direct premium, claims paid (direct) and investment income of policyholders and shareholders. Life insurers are required to submit gross premium, benefits paid (gross) and investment income for policyholders and shareholders.

The information should be submitted on or before the 15th day of the month succeeding the reporting month through the National Informatics Centre (NIC) online data templates created for the purpose. Insurers are advised to ensure the information furnished is complete and accurate, IRDAI said.

At present, the insurers publicly share details of their monthly new business premium through the Life Insurance Council and General Insurance Council and with IRDAI. The investment income and claims paid, however, are not shared in this channel.

A new macro indicator to measure the short-term changes in the growth of the services sector, MoSPI’s Index of Services Production is the counterpart of the IIP (Index of Industrial Production) which measures the economic growth of the industrial sector. ISP will cover the formal services sector and will be released on a monthly basis.

Insurance is part of the sub-sectoral coverage under ISP — wholesale and retail trade, transport, banking, telecommunications, hotels and restaurants, real estate, professional, scientific and technical services, arts, entertainment and recreation among others.

The base year of ISP is 2024 -25.

With the services sector emerging the dominant force in the Indian economy, contributing over 50% of the gross value added since 2013-14, India needs a short-term indicator to measure the growth of the sector to enable planners and policymakers to take suitable measures to guide the growth trajectory. ISP will be released with a monthly frequency with a lag of about 60 days, the government had said in June.

The Insurance Regulatory and Development Authority of India (IRDAI) has set timelines for insurers to submit documents related to complaints before the Insurance Ombudsmen and warned that non-compliance could result in ex-parte orders.

The regulator has directed all the insurers, except reinsurers, to submit the self-contained note (SCN), along with all supporting documents, within seven days of receiving a notice from Insurance Ombudsmen concerned. Any additional information or documents sought by Ombudsmen must be furnished within three days of the notice.

All the required information and relevant documents should be submitted in “one-go” rather than in a piece-meal manner, IRDAI said in a circular.

Clear pending demands within 30 days

It also directed insurers to clear all pending requests for SCNs, additional information and supporting documents from the offices of Ombudsman within 30 days of the circular.

Failure to comply will result in Insurance Ombudsman concerned proceeding with the matter ex parte, based on the information available on record, without further delay, the regulator said. In support, it cited Rule 17(4) of the Insurance Ombudsman Rules that require Ombudsmen to finalise findings and pass awards within three months of receiving all required information from the complainant.

Inordinate delays

Executive Director R.K.Sharma, in the circular, said IRDAI had noted with concern the inordinate delays by insurers in submitting SCNs, supporting documents and additional information sought by Ombudsmen. Besides raising this, the Insurance Ombudsmen, during a recent orientation programme, had also pointed out that insurers often submit documents in a piecemeal fashion and after significant delays. Such an approach in turn to lead to delay in disposal of the complaints filed by policyholders/beneficiaries.

During 2025-26, the Insurance Ombudsmen had decided 41,055 grievances. Of these 79% were in favour of the policyholders, IRDAI had said during an orientation programme it organised in May.