[Update] IRDAI Extends Feedback Deadline For Insurance Distribution Reforms To Oct 31

IRDAI has extended the deadline for feedback on its proposed insurance distribution reforms to October 31 from October 25, after receiving over 650 comments

The proposed commission caps and lower expense limits have faced opposition from insurance brokers, who warn of revenue losses and potential job cuts

The reforms could take effect as early as January 2027, with IRDAI proposing a five-year transition to lower expense limits and incentives for insurance distribution in smaller towns

Update | October 26, 12:52 IST

The Insurance Regulatory and Development Authority of India (IRDAI) has extended the deadline for stakeholders to submit feedback on its proposed insurance distribution reforms to October 31 from October 25, following an “encouraging response” to the consultation paper.

The insurance regulator said it has received more than 650 comments on its consultation paper, titled ‘Recalibrating Economics of Insurance Distribution’, released on September 23. The paper proposes changes to commission structures for insurance distributors and expense limits for insurers.

“In view of the significant interest and to facilitate wider participation, the last date for submission of comments has been extended till 31st October 2026,” IRDAI said.

The extension comes amid opposition from insurance brokers over the proposed changes, with the Insurance Brokers Association of India (IBAI) previously seeking an extension of the feedback deadline until December 31, 2026.

Original | October 7, 12:14 IST

The Insurance Brokers Association of India (IBAI) has said that the Insurance Regulatory and Development Authority of India’s (IRDAI) recently proposed norms could trigger a 60-70% revenue collapse across the insurance broking sector. 

Addressing a press briefing, the industry body representatives also said that the insurance distribution sector, which employs over 83 Lakh people, could see the loss of up to 10 Lakh jobs lost as a result of the economic impact of the proposed policies. 

This comes days after IRDAI proposed reintroducing product-wise commission caps for insurance distributors. The regulator also proposed tighter limits on insurers’ overall expenses over concerns related to disproportionate increases in commissions paid to distributors. 

The industry body has also sought an extension of the deadline to submit feedback on the proposed norms to December-end from October 25 currently. 

While noting that the association supports the regulator’s goal of making insurance more affordable and accessible, the IBAI representatives noted that the proposed sweeping changes threaten small businesses and MSMEs. 

The resulting job losses could impact insurance awareness, policy renewals, assistance to policyholders, and penetration of insurance among underserved communities, the representatives added.

The brokers also countered IRDAI’s data that showed that general insurance premiums sourced through brokers had risen 37% whereas commission payouts zoomed 173% between FY23 and FY27. The industry body argued that the rise in commissions since FY23 largely reflected the reclassification of off-book marketing expenses following regularisation, and did not reflect inflationary pressures on insurance consumers. 

The IBAI also claimed that the entire general insurance industry’s operating expenses averaged around 26.5% of gross premiums as against the mandated limit of 30%. Making its point, the representatives also claimed that policyholders received back ₹84.4 in non-life insurance claim payouts for every ₹100 of premium paid over a five-year period. 

This is more than the global average of 72-75%, demonstrating the efficiency of the market in delivering value, the body’s representatives claimed. 

The industry body said it was ready to work with IRDAI to address specific market anomalies, such as misselling or disproportionate remuneration. It has also submitted formal letters to the Prime Minister’s Office and the Finance Ministry on the matter. 

Notably, the pushback comes as insurtech platforms continue to be up in arms against the proposed norms. Last week, Sanjib Jha, founder of insurtech startup Coverfox, said that the proposal could impact the viability of distributing insurance to rural and low-income borrowers. 

Pune-based insurance broker Quickinsure has also trimmed more than 100 jobs in response to the proposal as its founder Anand Shrikhande projected that the industry would see more than 1 Lakh jobs affected due to the changing economics. 

The news has also triggered a major sell-off in listed insurtech majors PB Fintech, which operates Policybazaar, and Turtlemint over fears that the IRDAI’s new policies would dent their core businesses. 

Source: Inc42