Insurance distributors are seeking clarity on whether the Insurance Regulatory and Development Authority of India’s (IRDAI) proposed commission caps will apply to existing policies and future renewal payouts. Distributors are expected to raise the issue in their submissions on IRDAI’s consultation paper, Recalibrating Economics of Insurance Distribution. The concern is that retrospective application could reduce future renewal income from policies already sold, rather than limiting the impact to new business written after the proposed rules take effect.
The issue is particularly relevant for distributors because renewal commissions form an important part of the economics of long-duration life and health insurance policies. Online distributors such as PB Fintech, Turtlemint and InsuranceDekho, as well as banks and NBFCs earning insurance-distribution income, could be affected if existing books are brought under the proposed caps. IRDAI’s wider proposal would introduce product- and channel-specific commission limits based on factors including product complexity and the effort involved in selling and servicing policies.
The consultation paper also proposes lower Expenses of Management (EoM) limits, stronger transparency requirements and measures to address mis-selling, including commission clawbacks. Stakeholders have until October 25, 2026 to submit comments, and the final framework will determine whether and how the proposed commission structure affects existing policies and renewal income.
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