Insurance Brokers Oppose IRDAI Reform Proposals Over Commission Caps and Expense Cuts

Insurance brokers have strongly opposed proposed reforms by the Insurance Regulatory and Development Authority of India, warning that new commission caps and expense cuts will hurt customer service and cut jobs.

Association Concerns

The Insurance Brokers Association of India stated that the measures could weaken brokers who legally must act in the customer's interest. The association questioned why an independent broker should receive less pay than an insurer's tied agent. Regulator data shows 69% of general insurance complaints relate to claims, while 63% are decided in the customer's favor.

Support And Objections

While supporting measures like banning compulsory insurance bundling and stopping mis-selling, the association objects to more than 30 commission caps and a major reduction in overall expense limits. It noted that general insurers' expenses actually fell from 28.2% in the 2022-23 period to 26.5% in 2024-25, even as premiums grew by 13% annually. The group warned that commissions below service costs could force distributors to leave smaller markets and cut staff in Tier-2 and Tier-3 towns.

Context

Insurance brokers play a vital role in helping Indian policyholders compare policies, negotiate coverage, and navigate claim settlements. Regulatory updates in the insurance sector often spark debates between oversight bodies aiming to control costs and market participants managing field-level operations.