IRDAI Plans Stricter Commission Caps for Insurance Intermediaries

The Insurance Regulatory and Development Authority of India (IRDAI) is moving to tighten transparency norms for insurance intermediaries, including brokers, banks, and web aggregators. Officials indicate the regulator is crafting a draft proposal to implement commission caps, leveraging powers granted by the January 2026 amendment to the Insurance Act to curb excessive payout structures across the industry.

The move follows a significant surge in industry payouts, with total commissions paid by life and non-life insurers exceeding Rs 1 lakh crore in FY25. Reports suggest that intense competition for market share has led insurers to offer aggressive, performance-linked incentives to intermediaries, contributing to issues like policyholder mis-selling and inflated administrative costs that ultimately impact consumer policy pricing.

Under the proposed framework, intermediaries will likely face mandatory public disclosure of commission earnings, related-party transactions, and dividend repatriations on their official websites. By improving disclosure standards, the IRDAI aims to align intermediary compensation more closely with policyholder interests, effectively reducing the incentive to prioritize high-commission products over consumer-friendly insurance solutions in a competitive distribution landscape.