New Delhi: The Insurance Regulatory and Development Authority of India (IRDAI) is open to suggestions from industry stakeholders on proposed insurance distribution reforms and is considering a phased implementation of changes to commission rules, Chairman Ajay Seth has said.

Speaking to reporters at the Samvaad 2026 India Open Finance Summit on October 15, Seth said the regulator does not intend to disrupt the livelihoods of insurance agents or existing business models. The final implementation timeline will depend on feedback received during the consultation process.

IRDAI is weighing January 1 or April 1 as possible dates for implementing the proposed reforms. The regulator is also considering concerns raised by smaller insurers, insurance distributors and stakeholders involved in low-value insurance policies.

The consultation comes amid industry concerns over proposed commission caps and tighter limits on insurers’ expenses. The reforms aim to review the economics of insurance distribution, with the regulator assessing feedback before finalising the framework.

IRDAI considers phased rollout of commission reforms

Seth said the regulator is willing to consider suggestions on how the proposed commission-related changes should be implemented. A phased rollout is among the options being considered as IRDAI evaluates feedback from insurers and intermediaries.

The proposed reforms have drawn attention because commission structures form an important part of the business models used by insurance agents, brokers and other distribution channels.

The regulator is also considering the position of smaller insurers and distributors, as well as businesses involved in low-ticket insurance products. These segments may have different operating costs and distribution requirements compared with larger insurance businesses.

The final implementation date has not been confirmed. According to the regulator’s comments, the timeline will be decided after the consultation process and further work on the draft regulations.

Insurance brokers seek intervention over proposed caps

The Insurance Brokers Association of India (IBAI) has raised concerns about IRDAI’s proposed changes. The association wrote to Prime Minister Narendra Modi seeking intervention and requested a meeting with the regulator before the October 25 deadline for stakeholder feedback.

IBAI has urged the regulator to retain the existing 2023 Expense of Management framework until its scheduled review in 2028. It has also opposed hard caps on commissions and called for a published assessment of the likely impact of the proposals.

The association warned that the changes could affect intermediary livelihoods, competition and insurance penetration. It has also questioned whether reducing distribution costs would necessarily result in lower costs or better outcomes for policyholders.

The concerns reflect the challenge facing the regulator: balancing the economics of insurance distribution with consumer interests and the sustainability of different business models.

Proposed changes cover commissions and insurer expenses

IRDAI’s September 23 consultation paper, titled Recalibrating Economics of Insurance Distribution, proposed commission caps across more than 30 product and distribution-channel categories.

The proposals also include a reduction of around one-third in insurers’ overall expense limits. The regulator is seeking to reassess how distribution costs and commissions affect the insurance market.

Commission structures can influence how insurance products are marketed and sold. The regulator’s review therefore has implications for insurers, intermediaries and customers, although the final effect will depend on the rules eventually adopted and how the industry responds.

Stakeholders have raised questions about whether uniform limits would work equally well across different products and distribution channels. Smaller insurers and distributors, in particular, have sought consideration of their operating requirements.

IRDAI is now weighing the feedback before deciding on the final framework.

Regulator says foreign investment concerns have not emerged

Seth also said the regulator had not received concerns that the proposed changes would adversely affect foreign direct investment in the insurance sector.

He noted that foreign investor interest in both life and general insurance remained strong.

The comments come as the insurance sector reviews the potential effects of regulatory changes on distribution, costs and business operations. The regulator’s position is that stakeholder feedback will be considered while the reforms are being finalised.

Insurance policy details may enter consolidated statements

Seth also said insurance policy details could be integrated into consolidated account statements, potentially making it easier for people to view information about their insurance holdings alongside other financial information.

Separately, the risk-based capital framework remains on track for implementation from April 1, 2027.

The framework is distinct from the proposed commission reforms, but both form part of the regulator’s wider work on insurance-sector rules and financial oversight.

What the proposed reforms mean for agents and policyholders

For insurance agents and intermediaries, the proposed commission changes are significant because compensation structures can affect distribution strategies and business operations. IRDAI’s willingness to consider a phased rollout indicates that the regulator is assessing how to implement the changes without abruptly disrupting existing models.

For policyholders, the eventual impact will depend on the final commission limits, expense rules and the response of insurers and distributors. Lower distribution costs do not automatically guarantee lower premiums, and the effects may differ across insurance products.

The regulator has not yet announced the final rules or confirmed the implementation date. Stakeholders have until October 25 to submit feedback under the current consultation timeline.

IRDAI’s next steps will determine how the proposed changes are revised, when they take effect and how the regulator balances consumer interests with the need to maintain a functioning insurance distribution network.