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Informist, Wednesday, Oct. 7, 2026

 

--RBI Malhotra: No view so far on IRDAI's commission reform norms 

 

MUMBAI — The Reserve Bank of India has not yet firmed up its view on the Insurance Regulatory and Development Authority of India's proposed changes to insurance distributor commissions, RBI Governor Sanjay Malhotra said Wednesday. The governor, however, said the proposals appeared primarily aimed at protecting consumers by lowering costs and curbing mis-selling. 

 

"First of all, it's a draft. They (IRDAI) will take comments from all stakeholders, including the industry and consumer groups, etc," Malhotra said. "It is primarily... I think... in consumer interest, to reduce the cost and also, at the same time, to prevent and reduce mis-selling. They will take a call in the best interests of the consumer and industry." 

 

The decision on how insurance products should be distributed falls within the insurance regulator's remit, he said. "This is in the realm of the insurance regulator to decide as to what and how they want to do distribution of insurance products," the governor said. "... we have not firmed up our view on this. We will give our comments to them."   

 

IRDAI's consultation paper, released in September, proposed linking distributor commissions to the complexity of sales and servicing rather than following a uniform structure. The proposed commission would depend on factors including the segment, line of business, distribution channel and product complexity.

 

In the distribution overhaul, the consultation paper seeks to cap management expenses for life insurers at 15% of gross direct premium income within two years and 12.5% within five years. Management expenses for general insurers will be capped at 25% of gross direct premium income in two years and 20% in five years. Currently, the latter category's management expense cap is 30% of gross written premium. The first year in the glide path would be 2027-28 (Apr-Mar), the paper said.

 

To offset this, the regulator proposed reducing its fee to 0.04% from 0.05% of the premium, capped at INR 200 million annually.  This will reduce the total fee for all insurers except five and return up to INR 375 billion in premiums to the industry, according to the consultation paper. IRDAI has sought stakeholder comments on the proposals by Oct. 25.

 

Reported by Diksha Tripathy 

Edited by Saji George Titus

 

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