The Insurance Regulatory and Development Authority of India (IRDAI) has proposed a comprehensive overhaul of the insurance commission structure, according to a Business Today report on July 9. The proposed changes aim to curb misselling, reduce policy lapses, and align distributor incentives with long-term customer outcomes.
Key Proposals: Caps on commissions for high-premium savings products where commissions currently range from 15-40% of first-year premium; a graded commission structure that incentivizes persistency; disclosure requirements where agents and brokers must explicitly disclose commission amounts to customers; and a ban on reward-based selling where specific products are pushed based on higher commission payouts rather than customer need.
The proposal has drawn mixed reactions. Consumer advocacy groups have welcomed the move, arguing that high commissions have been a major driver of misselling, particularly in rural and semi-urban areas. Insurance industry bodies have expressed concerns about the impact on agent livelihoods, especially in Tier 2/3 markets where agent density is already low. IRDAI has invited stakeholder comments on the proposals, with final guidelines expected by end-September 2026.
Source: Business Today (July 9, 2026)