The Insurance Regulatory and Development Authority of India (IRDAI) is likely to take a cautious approach to the proposed distribution reforms, as building consensus among stakeholders remains a challenge.

The regulator may extend the October 25 deadline for submitting feedback to allow wider consultations and push back the reforms implementation timeline, according to sources.

The IRDAI released a consultation paper on distribution reforms on September 23, proposing caps on insurer expenses, including commissions.

Methodology issues

Industry representatives, including insurance company heads, have raised concerns over the methodology for calculating current distribution costs, including commissions, and the tighter norms proposed for the bancassurance channel. Some proposals on health insurance have also come up for discussion, an industry source told businessline.

While the IRDAI is keen to make insurance more affordable and has asked stakeholders to explore options such as non-financial incentives to lower distribution costs, the industry has called for a viable commission structure and a review of the proposed norms.

Consensus is also needed on bancassurance, which the regulator’s data identify as one of the costliest insurance distribution channels.

The consultation paper noted that, instead of translating into lower costs or better customer outcomes, the extensive customer reach of bancassurance entities appeared to be contributing to the maximisation of commission income.

Banks are also assessing the potential impact of commission caps on their ‘other income’. They are expected to participate in the consultation process through the Reserve Bank of India.

Phased rollout

Insurers have sought a phased rollout or a longer implementation window, beyond the start of the next financial year, said sources.

The Insurance Brokers Association of India has also taken its concerns beyond the IRDAI and sought an appointment with Prime Minister Narendra Modi to present its views on the proposed reforms.

Published on October 12, 2026