IRDAI has proposed changes to insurance companies' expense and commission regulations. The proposal includes lowering commission limits for different segments and reducing overall expenses.

IRDAI proposes new rules on commission

If you're planning to purchase life, health, or general insurance, this news is useful. The Insurance Regulatory and Development Authority of India (IRDAI) has proposed new changes regarding commissions and company expenses in the insurance sector. The primary purpose of this proposal is to control commissions paid to insurance companies, agents, and distributors, and to make policy sales more transparent.  

In fact, in a consultation paper released on September 23, 2026, IRDAI proposed gradually reducing the regulations related to insurance companies' Expenses of Management (EoM). It also called for setting maximum commission limits based on different insurance products and distribution channels.

What is the new proposal regarding commission?

According to this new proposal, any payment made to a distributor, whether by commission, reward, incentive, or any other name, will be included in commission. The current 30% limit for general insurance companies is proposed to be reduced to 25% within two years. This limit could be further reduced to 20% within five years.

IRDAI has proposed reducing not only commissions but also management expenses for insurance companies. The EoM limit for life insurance companies is proposed to be reduced to 15% over two years and 12.5% ​​over five years.

All types of payments will be included in the commission

In the new proposal, it has been said that not only the direct commission but also other benefits given to the distributor should be included in the commission.

• Cash Payment
• Gifts and incentives
• Brand or marketing support
• Other financial benefits to the distributor

What will be the impact on customers?

If implemented, this proposal could give insurance companies and distributors greater control over their charges and commissions. According to IRDAI, the reduction in EoM could help reduce the overall cost of insurance. This is expected to impact policy prices and customer benefits in the future. However, the exact reduction in premiums for a particular policy is not yet clear.