IRDAI distribution reforms are proposals that have been put out for public consultation. The Insurance Regulatory and Development Authority of India (IRDAI) released a Public Consultation Paper on “Recalibrating Economics of Insurance Distribution”, according to IRDAI’s own release. That release gives 25 October 2026 as the last date for comments and feedback.
What IRDAI Put Out for Public Comment
IRDAI’s press release carries the date 23rd September 2026. The paper it describes is a consultation document, so the measures set out in it are put forward for comment.
On its objective, the release states that the primary aim is to foster a customer-centric, competitive, efficient and transparent distribution ecosystem.
The release also refers to legislation. It says that the proposed reforms are anchored in the expectations of the Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Act, 2025.
For readers who follow distribution at IRDAI, InsuraBeat has separate coverage of IRDAI’s appointment of a member for distribution.
A Proposed Distribution Architecture Built on Shared Rules
On the architecture, the release states that the proposed distribution architecture is guided by the principle of “same structure, same functions, same norms.”
On the shape of that architecture, the release states that the proposal seeks to replace the existing complex and fragmented architecture with three broad categories of distribution entities namely Insurance Distribution Entities (IDEs), Insurance Distribution Persons (IDPs) and Market Infrastructure Institutions (MIIs).
The release adds that, under the proposal, entities with the same structure would have the same scope of business, obligations and regulatory framework.
For readers who follow IRDAI’s regulatory decisions, InsuraBeat has separate coverage of IRDAI board decisions on perpetual registration and salesperson tagging.
Lower Expense Limits and Recalibrated Commissions
On expense of management, the press release states that the Expense of Management (EoM) framework is proposed to be recalibrated through lower limits with a phased glide path. The release then addresses life insurers and general insurers in turn, and it words the limits as proposals, using forms such as “would” and “is proposed”.
For life insurers, the EoM limit would move to a company-level basis linked to Gross Direct Premium Income (GDPI), with the limit proposed at 15% within two years and 12.5% within five years.
For general insurers, the basis would shift from Gross Written Premium (GWP) to domestic Gross Direct Premium Income (GDPI), with the EoM limit reducing from 30% of GWP to 20% of GDPI within five years, also through progressive annual reductions.
On commissions, the release states that commission limits would take into account the segment, line of business, distribution channel, product complexity and the effort involved in selling and servicing the product. The release also states that the sale of products in under-served areas (small towns with population of upto 50 thousand and rural areas, and smaller cities with population upto 10 lakhs) may have rewards over and above the normal commission limits.
Among the proposals in the release are cost audits and safeguards against indirect payments with the objective of ensuring greater accountability for the actual cost of distribution.
Transparency, Mis-Selling Safeguards and Digital Infrastructure
On disclosure, IRDAI’s press release includes the following proposal. Insurers and large distribution entities would be required to disclose commission policies and structures in a simple and accessible manner, while specified commercial policies would carry commission disclosures.
On mis-selling, the release states that the reforms also seek to strengthen safeguards against compulsory bundling of insurance with other financial products and services and address mis-selling through greater accountability. Measures described in the release include documenting customer needs and suitability, explicitly including all forms of remuneration, direct or indirect, within the definition of commission for regulatory purposes, and prohibiting volume-linked or reward-linked incentives for bank and NBFC staff selling insurance.
The release says the measures also include linking the identity of the individual with the policy sold, placing information on mis-selling incidents in the public domain, and providing for commission claw-back in cases of mis-selling. For readers who follow mis-selling cases, InsuraBeat has separate coverage of an IRDAI penalty in a mis-selling case.
The release adds that the consultation paper also proposes tracking dark patterns and making relevant performance information available to strengthen market discipline.
On digital infrastructure, the release states that the consultation paper proposes Market Infrastructure Institutions (MIIs) for insurance as digital, pull-based alternatives for insurance distribution, with Bima Sugam identified as one such infrastructure. It adds that the paper also envisages greater use of the Public Insurance Registry (PIR) to support transparency, comparison, portability and operational efficiency.
For readers who follow the public registry, InsuraBeat has separate coverage of IRDAI’s consultation on a public insurance registry.
How and When Stakeholders Can Respond
The release sets out the routes for responding. It states that comments and feedback may be submitted through the web consultation process, through the prescribed Excel template uploaded on the consultation portal, or by email.
On timing, the release states that the last date for submission of comments and feedback is 25 October 2026. The details reported here are those given in IRDAI’s press release. IRDAI’s other press releases are available on its press releases page.
