Insurance Brokers Association of India (IBAI) will soon initiate a dialogue with the Insurance Regulatory and Development Authority of India (IRDAI) over the proposed reforms in the insurance distribution framework in the country.
The IRDAI issued a two-part consultation paper, “Recalibrating Economics of Insurance Distribution” on 23 September 2026. The consultation paper deals with proposals covering distributor remuneration, insurers’ expenses, market conduct, transparency and digital distribution. IRDAI has invited stakeholder comments by 25 October 2026. The measures are presently proposals and can be amended before any final regulations are issued.
IBAI President Narendra Bharindwal said, “We are carefully reviewing the consultation paper to fully understand the scope, implications and intent of the proposals outlined by the regulator. While we have certain concerns regarding some of the proposed changes and their potential implications for the insurance ecosystem, we believe the consultation process provides an important opportunity for constructive stakeholder engagement.
“We intend to engage with IRDAI in a positive, evidence-based and progressive manner, with the objective of contributing to a regulatory framework that protects policyholder interests, supports sustainable growth of the insurance sector, and advances the broader objective of Insurance for All.”
IBAI represents around 750 members, who produce over INR500bn ($52.25bn) of annual premium in INR3.36tn Indian general insurance market.
Industry reactions
According to market sources the proposals could have significant implications for their operating economics, remuneration structures and the way distribution costs are managed across the insurance value chain.
Generali Central Life Insurance MD and CEO Mr Alok Rungta said, “Our assessment will be how the proposed framework balances distribution efficiency with the need for quality advice, long-term customer servicing and wider insurance penetration."
Shardul Amarchand Mangaldas & Co Partner Ms Shailaja Lall said, “The proposal on capping remuneration for new-vehicle motor insurance at nil for third-party premium and 5% for own-damage and related covers, would also bring technology, awareness and related spends within the commission ceiling, while replacing the existing Motor Insurance Service Provider framework with a broader Insurance Distribution Entity regime.
“The reforms could therefore change the traditional dealer-led model in which insurance sales, vehicle financing and after-sales servicing are closely linked. Revenue pressures may encourage distributors to place greater emphasis on renewals, servicing, technology and other permissible value-added services.”
Ms Lall said, “The final impact, however, will depend on the provisions ultimately adopted by IRDAI and the transition framework accompanying them.”
CoverSure Founder & CEO Saurabh Vijayvergia said, “An industry doesn't grow by being harder to trust; it grows by being easier to trust. There has been a fundamental gap between distribution and fulfilment in the insurance industry in the country. Almost all distribution models in India are built on the rails of distribution margins, not on owning the customer experience. The reforms IRDAI has suggested bridge that gap by reassigning that responsibility.”
Deloitte India Partner Debashish Banerjee said, “As anticipated and highlighted by us earlier, IRDAI's consultation paper introduces a structural reset for the Indian insurance ecosystem by shifting towards an effort-aligned payout framework and capping product-level commissions.
“The intent will certainly help the customers / policyholders, but this will also cause an immediate margin squeeze for distributors like, bancassurance partners and NBFCs etc. Ultimately, the proposal aims to drive digital adoption, improve policy persistency and create a more sustainable, consumer-first marketplace. As the saying goes, ‘necessity is the mother of innovation’, and these changes will compel companies to be innovative.”