IRDAI Proposes Stricter Commission Disclosure For Insurance Intermediaries

The Insurance Regulatory and Development Authority of India (IRDAI) is moving to increase transparency in the insurance distribution sector by mandating that intermediaries disclose their commission earnings. Under the new proposal, agents, brokers, banks, and web aggregators exceeding specific income thresholds must make detailed annual disclosures to both the regulator and the public. These filings are required to cover commission income, related-party transactions, operational profits, and dividend repatriations to parent entities, aiming to curb mis-selling and improve policyholder protection.

The initiative addresses concerns regarding high commission-driven competition that often results in price undercutting and aggressive sales practices. Insurance commission expenses for the industry surpassed the Rs 1 lakh crore mark in fiscal year 2025, with life insurers alone paying out Rs 60,800 crore. The regulator is reportedly preparing a draft proposal to cap these commission payouts, utilizing powers granted by the January 2026 amendment to the Insurance Act. This structural change aims to force insurers to shift focus toward service quality and product innovation rather than purely incentive-based distribution.

The move could significantly disrupt the current distribution landscape, particularly for sectors like health, motor, and corporate insurance where competition for intermediaries is fierce. Digital platforms and insurtech firms, which have thrived by lowering customer acquisition costs, may face a more standardized regulatory environment. By mandating public disclosure of earnings on websites, the IRDAI aims to shift accountability toward the intermediary, ultimately intended to lower the hidden costs of policies for the average Indian consumer. The final regulations are expected to bring greater order to an industry that has grown rapidly but currently faces scrutiny over transparency and fair market practices.