New Delhi: The Insurance Regulatory and Development Authority of India (IRDAI) is considering requests for additional time to submit feedback on its proposed insurance distribution reforms, with insurance brokers seeking an extension amid concerns over commission limits, operating costs and the future of intermediary businesses.

The regulator is open to considering an extension of the October 25 deadline and may grant additional time selectively to certain market intermediaries. However, no final decision has been taken, and IRDAI is continuing to examine the feedback received from stakeholders.

The proposed reforms aim to change how insurance distributors are remunerated, control distribution expenses and improve outcomes for policyholders. While the regulator wants to reduce excessive costs and curb mis-selling, brokers and bancassurance players have raised concerns that the proposed framework could affect their business models and the economics of servicing customers.

Why are insurance brokers seeking an extension?

The Insurance Brokers Association of India (IBAI) has asked IRDAI for more time to examine the proposed changes and prepare a detailed response. The association has sought an extension until late December 2026, arguing that the proposals could have far-reaching consequences for insurance distribution.

Brokers say the proposed changes need a more detailed assessment of their potential effects on revenue, employment, competition and customer service. They have also called for clarity on how the new framework would be implemented and how existing businesses could adjust to the changes.

The association has questioned whether lower commissions would automatically translate into lower insurance premiums or better benefits for policyholders. It argues that intermediaries also bear the costs of customer acquisition, policy renewals, servicing and claims assistance.

IRDAI is seeking feedback from different sections of the market before finalising the framework. The regulator’s willingness to consider additional time does not mean an extension has been approved; stakeholders are still awaiting a formal decision.

What do the proposed IRDAI reforms cover?

IRDAI issued its consultation paper, titled Recalibrating Economics of Insurance Distribution, on September 23, 2026. The proposals seek to overhaul aspects of the insurance distribution system, including how intermediaries are paid and how insurers manage their distribution expenses.

Key proposals include:

  • Commission limits: Product-specific and distribution-channel-specific caps on commissions paid to intermediaries.
  • Expense controls: A phased reduction in insurers’ permitted expenses of management.
  • Simplified distribution structure: A proposed three-tier framework for insurance distribution.
  • Mis-selling safeguards: A clawback mechanism to recover commissions in cases involving established mis-selling.
  • Policyholder protection: Measures intended to improve transparency, affordability and the value customers receive from insurance products.

The proposals are intended to address concerns about rising distribution costs and the possibility that excessive commissions may encourage unsuitable sales. The final rules have not yet been issued, and the framework may change after stakeholder consultation.

Brokers warn of revenue and employment risks

Insurance intermediaries have argued that the proposed commission limits could make some distribution activities financially difficult to sustain.

In early October, IBAI warned that the proposed framework could reduce revenue for some broking businesses by 60% to 70% and put around 10 lakh distribution-related jobs at risk. These are industry estimates, not confirmed job losses, and the actual impact would depend on the final regulations and how businesses respond.

Brokers have also raised concerns about the impact on smaller-premium policies. They argue that distributors may find it harder to cover servicing costs when commissions are reduced, potentially encouraging them to prioritise higher-value policies.

The industry has called for an impact assessment and a transition period that would give smaller intermediaries time to adapt. It has also urged the regulator to distinguish between different distribution channels, as brokers, agents and bank-led distribution businesses have different responsibilities and operating costs.

Bancassurance players raise concerns over costs

The concerns are not limited to independent insurance brokers. Bancassurance players, which distribute insurance products through banks and their networks, have also questioned whether the proposed commission caps adequately account for servicing and compliance expenses.

These businesses say the cost of distributing insurance involves more than the initial sale. Customers may require help with policy documentation, renewals, service requests and claims-related queries.

If remuneration does not adequately reflect these responsibilities, intermediaries argue, some distribution channels could become less commercially viable. This could have implications for the availability of insurance assistance, particularly for customers in smaller cities and rural areas.

The regulator, however, is seeking a framework that limits excessive costs while maintaining a functioning distribution network and improving the value delivered to policyholders.

IRDAI says reforms should not disrupt livelihoods

IRDAI Chairman Ajay Seth has previously said the regulator intends to ensure an orderly transition and does not want the proposed changes to disrupt existing business models or the livelihoods of insurance agents.

Speaking to reporters on October 15, Seth said the regulator was considering feedback from insurers, distributors and other stakeholders. Requests included greater flexibility for smaller players, relief for low-value policies and a phased transition to the proposed system.

Seth has also indicated that the timing of implementation could depend on the consultation process. January 1 or April 1, 2027, have been discussed as possible start dates, but the final timeline remains subject to the regulatory process.

The regulator’s approach suggests that the final framework could incorporate changes based on stakeholder submissions. However, neither a deadline extension nor specific relaxations should be treated as confirmed until IRDAI formally announces them.

What happens next?

Stakeholders are currently expected to submit their comments by October 25, 2026, unless IRDAI announces an extension. The regulator is reviewing the feedback and may decide whether additional time should be provided to particular groups of intermediaries.

The final outcome will be important for insurance brokers, bank-led distributors, insurers and policyholders. The central question is how to reduce excessive distribution costs and discourage mis-selling without weakening customer access, competition or claims support.

For now, IRDAI is weighing stakeholder concerns while keeping its broader reform objectives in view. The deadline extension remains under consideration, and the final rules will depend on the consultation process and the regulator’s subsequent decisions.