Industry Odisha Bureau, Sept 29: The Insurance Regulatory and Development Authority of India (IRDAI) has proposed changes to insurance distribution, expenses, commissions and digital infrastructure. The move aims to improve transparency and strengthen policyholder protection.
The proposals come as part of a consultation process and are not final rules. If implemented, they could affect how customers compare, buy and service insurance policies.
Could insurance become cheaper?
IRDAI has proposed reducing insurers’ Expense of management limits in phases. For life insurers, the limit could fall to 15% of Gross Direct Premium Income (GDPI) within two years and 12.5% within five years. For general insurers, it could move to 20% of GDPI over five years.
The regulator says lower operating costs could support affordability, although this does not mean premiums would automatically fall for all customers.
Will commission structures become clearer?
The proposed framework seeks greater transparency around insurance commissions. Insurers and large distribution entities could be required to disclose their commission policies and structures in a simple and accessible manner.
Could mis-selling safeguards become stronger?
IRDAI has proposed greater accountability for distributors, including documenting customer needs and suitability and covering direct and indirect remuneration under commission. It has also proposed restrictions on volume/ reward linked incentives for bank and NBFC employees.
The proposals include identifying the individual who sold each policy, publishing mis-selling information and allowing commission clawbacks where mis-selling occurs.
Could digital platforms offer more choice?
IRDAI has proposed greater use of platforms such as Bima Sugam and the Public Insurance registry. This is in order to support comparison, portability, transparency and policy servicing.
The proposals could also give motor insurance buyers more digital options and prevent dealers from denying cashless repair solely because a customer purchased insurance from another provider.
