India's insurance regulator has given stakeholders an extra week to respond to one of the most far-reaching reform proposals for the sector in recent years, extending the deadline for feedback on its plan to reshape how insurance is sold in the country.
The Insurance Regulatory and Development Authority of India, known as IRDAI, said in a release on 24 October 2026 that comments on its consultation paper on insurance distribution reforms will now be accepted until 31 October 2026, instead of the earlier deadline of 25 October 2026.
The regulator said the extension was prompted by what it described as an encouraging response to the consultation so far. More than 650 comments have already been received, it said, reflecting significant interest in the proposals and a desire among stakeholders for wider participation in the process.
The decision to extend the window is significant because the paper touches almost every part of the insurance distribution chain, from the commissions paid to agents and brokers to the costs insurers incur in running their businesses, and from the structure of intermediaries to the way customers are treated when they first explore a policy online.
At its heart, the consultation paper, titled Recalibrating Economics of Insurance Distribution, seeks to address a long-standing concern within the industry: that the cost of selling insurance in India has risen sharply, and that those costs are ultimately borne, directly or indirectly, by policyholders.
The paper was released on 23 September 2026 and is divided into two parts. The first part sets out the proposed reforms, while the second part presents an analysis of distribution costs and commissions across the industry. Together, they form the basis for a debate that could reshape the economics of life insurance, general insurance and health insurance distribution.
One of the central proposals is the introduction of product-specific and channel-specific caps on the commissions paid to distributors. At present, commission structures can vary widely depending on the type of product and the channel through which it is sold. The regulator's proposal would place clearer limits on those payments, differentiated by product and by channel, in an attempt to bring greater discipline and predictability to distribution economics.
Alongside the commission caps, the paper proposes a phased reduction in insurers' Expense of Management limits over a period of five years. The Expense of Management, commonly shortened to EoM, refers to the operating expenses an insurer is permitted to incur in managing its business. A phased approach, rather than an immediate cut, would give companies time to adjust their cost structures, renegotiate arrangements and improve efficiency without abrupt disruption.
Another major element is a simpler three-tier distribution structure. The aim, as set out in the paper, is to make the roles and responsibilities within the distribution system clearer and easier to understand, both for those working in the industry and for customers trying to make sense of who is selling them a policy and on what terms.
The paper also proposes a clawback mechanism, under which commissions could be recovered in cases of mis-selling. Mis-selling, where a customer is sold a product that is unsuitable for their needs or where key features and limitations are not properly explained, has long been a source of complaints in the insurance sector.
A clawback provision would create a direct financial consequence for distributors found to have mis-sold a policy, strengthening accountability and giving customers an additional layer of protection.
Closely related to that is a set of measures against dark patterns. Dark patterns are design practices, often seen on websites and mobile applications, that can nudge or mislead users into making choices they might not otherwise make, such as obscuring important information, making it difficult to decline an add-on, or presenting options in a way that steers the user towards a particular outcome.
The regulator's proposals seek to curb such practices in insurance sales, so that customers can make informed decisions based on clear information.
The paper also puts forward a framework for Mutual Insurance Intermediaries, a category that would formalise and regulate a particular form of intermediary activity. By setting out a framework for such intermediaries, the regulator aims to bring greater clarity to their role and to ensure that they operate within defined standards.
A further consumer-facing proposal seeks to prevent a practice that many customers will recognise: being required to share personal information before they can access even basic product features or pricing. Under the proposal, customers would be able to compare products and understand their basic features and costs before being asked to part with personal details.
The idea is to put comparison first and data-sharing second, so that a customer is not forced to hand over information simply to find out what a policy costs or what it covers.
The context for the reforms, as summarised from the paper, highlights the uneven structure of the Indian insurance market. In life insurance, the two largest insurers account for around 65 per cent of the market, while the bottom 15 together account for only about 5 per cent. In general insurance, the top 10 insurers account for around 68 per cent of the market.
Such concentration means that the economics of distribution can look very different for large and small players, and reforms that affect commissions and expenses will not land evenly across the industry.
Regional concentration is another striking feature. In retail health insurance, 10 states account for 80 to 82 per cent of policies, with Maharashtra alone accounting for around 20 per cent. In life insurance retail new business, 66 to 70 per cent is concentrated in 10 states. For policymakers, those figures raise questions about penetration in the rest of the country and about whether the current distribution model is reaching customers beyond the largest markets.
Cost figures cited in summaries of the paper underline why the regulator has chosen to act. Excluding the two largest life insurers, the cost of doing business for life insurers is around 22 per cent, with a range of 18 to 39 per cent across companies. For general insurers, excluding the largest player, the figure is around 29 per cent, with a range of 20 to 48 per cent.
Wide variations of that kind suggest that some companies are operating far more efficiently than others, and that distribution costs are a major part of the difference.
IRDAI Chairman Ajay Seth addressed the rationale for the overhaul in remarks to CNBC-TV18 on 30 September, shortly after the paper was released. He indicated that the exercise was driven by the sharp rise in distribution costs and commissions, and that the objective was to improve efficiency and policyholder outcomes, rather than simply to cut costs for their own sake.
That distinction matters for the industry, because it frames the reforms as an attempt to get better value for customers, not merely to reduce what distributors earn.
The proposals are anchored in the Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Act 2025, which came into effect on 5 February 2026. That legislation provides the broader legal backdrop for changes in the insurance sector, and the consultation paper should be read as part of that wider reform effort, rather than as an isolated set of tweaks to commission rules.
Industry reaction so far has been mixed, reflecting the different interests at stake. The Insurance Brokers Association of India has sought an extension to the consultation period, reportedly asking for time until the end of December, and has raised concerns about livelihoods and distribution.
Brokers have warned that lower commissions could weaken incentives in some segments, particularly where selling is already difficult or where the effort involved in advising a customer and servicing a policy is high.
Bancassurance players, who sell insurance through banks, have also raised concerns, arguing that commission caps may not fully reflect the servicing and compliance costs involved in their model. Banks that distribute insurance typically carry significant costs in training staff, maintaining systems, handling compliance and supporting customers after a sale, and they argue that any cap needs to take those costs into account.
The extension to 31 October gives all of these voices more time to make detailed submissions. Stakeholders can respond through the regulator's consultation portal, or by uploading a completed template in the prescribed Excel format. They can also email the completed template to drfeedback@iib.gov.in, as set out in summaries of the consultation process.
The regulator's decision to highlight the number of comments already received suggests that it is keen to ensure the final framework is shaped by evidence and experience from across the market, not just by the largest players.
For now, the message from the regulator is clear: the reform of insurance distribution is a priority, the response so far has been strong, and the door remains open for a few more days for anyone with a stake in how insurance is sold in India to have their say.
(Reporting based on NDTV Profit, Asia Insurance Post and ETBFSI.)