The proposals cover insurance companies’ expenses, commissions paid to agents and distributors, insurance sales through banks, mis-selling and the use of digital platforms. IRDAI has also proposed changes to the commission structure across different insurance products.
One of the key proposed changes for customers relates to insurance sold alongside loans. IRDAI has proposed restrictions on cases where banks or financial institutions make the purchase of a specific insurance policy a condition for granting a loan.
Under the proposal, customers should not be required to purchase insurance from the same bank or NBFC providing the loan. Information on the applicable interest rate should also be clearly disclosed depending on whether or not the customer opts for insurance.
IRDAI has also proposed little or no commission on mandatory covers such as third-party motor insurance. For banks and lenders selling insurance along with loans, commissions could be capped at between 2% and 5%, depending on the product. The proposal also seeks to prevent insurance from being forcibly bundled with loans.
For individual life insurance policies, IRDAI has proposed different commission limits based on the premium payment term, or PPT. The proposed structure would apply to both linked and non-linked policies.
For policies with a premium payment term of less than five years, first-year commission could be capped at 5% for distribution entities and 6.25% for agents. For a five-year PPT, the proposed limits would be 10% for distribution entities and 12.5% for agents.
For policies with a PPT of six to eight years, the proposed commission cap would be 14% for distribution entities and 17.5% for agents. For a nine-year PPT, the limits could be 18% and 22.5%, respectively. For a PPT of 10 years or more, distribution entities could receive up to 20% and agents up to 25% in commission.
Through this framework, IRDAI aims to ensure that distributors do not focus only on selling new policies but also pay attention to keeping policies active over the long term. According to the consultation paper, the commission structure should encourage distributors to help policyholders continue paying premiums for several years instead of focusing only on first-year commissions.
The regulator has also proposed lower commissions for single-premium policies and insurance products that provide tax-related benefits.
In individual pure-term insurance, the proposed commission would vary according to the premium payment method. For single-premium term policies, first-year commission could be capped at 7.5% for distribution entities and 10% for agents.
For term policies where premiums are paid over several years, first-year commission could be capped at 25% for distribution entities and 30% for agents. For such policies, renewal commission of 7.5% for distribution entities and 10% for agents has been proposed.
In health insurance, distributor commission on the sale of a new policy could be capped between 15% and 20%. For policy renewals and portability to another insurer, a lower commission of between 5% and 10% has been proposed.
For motor insurance, IRDAI has proposed capping commission on personal accident cover at between 5% and 10%.
The regulator has also proposed restrictions on so-called “dark patterns” used on insurance websites. For example, asking customers for a mobile number or other personal information before allowing them to view the price or features of an insurance product could be prohibited.
The proposal states that information related to products, prices and quality should be made available in a simple and standardised manner.
IRDAI is also working to make insurance purchasing more digital and customer-centric through digital arrangements such as Bima Sugam and the Public Insurance Registry (PIR). Bima Sugam is proposed to be developed as a digital insurance marketplace, while the PIR is intended to create better digital connectivity between insurance-related records and information.
However, these proposals have not yet become rules. They are part of consultation papers, and IRDAI has invited stakeholders to submit their comments. According to the report, comments have been sought by October 25, 2026.
If the proposals are eventually converted into regulations, customers could receive clearer information on insurance options and pricing, restrictions could be placed on making insurance compulsory while obtaining loans, and commission-based incentives in insurance sales could come under greater regulatory control.
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