More Stories

Informist, Saturday, Jul. 25, 2026

 

NEW DELHI – The finance ministry has proposed new insurance rules to ensure greater transparency in insurance products and stricter norms for insurance agents selling the products. The new rules--Insurance Rules, 2026--will replace the archaic 1939 framework, the Department of Financial Services said in a gazette notification Thursday, marking a significant regulatory overhaul of the decades-old norms. Stakeholders can submit feedback on the proposed norms within 30 days of issuance of draft norms. 

 

The government's draft norms mandate that any prospectus, premium table, or insurance-related document supplied to policyholders must clearly disclose the contingencies covered under the policy and the class of lives or property eligible for insurance under the particular product. It must also detail a full statement of conditions for premium discounts and necessary disclosures about insurance rebates. 

 

These disclosures will ensure the policyholders receive the fine print of the product upfront, which will help in making an informed decision. Indian regulators, including Finance Minister Nirmala Sitharaman, have time and again said that insurance, which is a sensitive financial product, should be explained thoroughly to customers before onboarding them. As such, misselling has been a recurring problem for the insurance industry, often hindering the penetration of insurance cover due to jacked-up premiums.

 

The draft also proposes stricter norms for agents selling insurance products, who are eventually the point-person for misselling. According to the draft norms, an agent can be recognised as an authorised insurance agent only after they demonstrate a minimum level of business generation by securing policies across categories. "It must have secured policies on six different lives excluding its own, and it must have been an insurance agent continuously from the time of its soliciting or procuring the first policy on each of such six lives or proposing for the policy on its own life, whichever is earlier, till the time when the policies on those six lives and the policy on its own life have all been issued," the draft said.

 

The agent can also opt for health insurance, or property, or liability products and follow the same drill to secure authorised insurance agent status. 

 

The finance ministry also prescribed responsibilities for Life Insurance and General Insurance Councils, including maintaining an updated list of insurers in the country. This list will have to be submitted to the government for publishing in the gazette once every year, in the month of January. 

 

The government proposed the introduction of updated disclosure requirements relating to ownership and beneficial interests in shares of insurance companies. Specific forms have also been prescribed for the same. For financially distressed insurers, the government proposed a framework to revive their operations, transfer business or proceed for liquidation where necessary.  

 

The draft norms also detail circumstances under which insurers may assume risk before receiving premium payments, including bank guarantees, advance deposits, government and semi-government entities, health insurance, aviation insurance, marine insurance, reinsurance, crop insurance schemes, and a few other disaster-related policy renewals.  End

 

Reported by Priyasmita Dutta

Edited by Akul NIshant Akhoury

 

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

 

Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd. by NSE Data & Analytics Ltd., a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt. Ltd.

 

Informist Media Tel +91 (11) 4220-1000

Send comments to feedback@informistmedia.com

 

© Informist Media Pvt. Ltd. 2026. All rights reserved.