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IRDAI wants to change how insurance is sold: what it means for you

By Ankeet Bahety · 17 Oct 2026

On 23 September 2026, IRDAI released a consultation paper on the economics of insurance distribution. These are proposals for comment, not final rules. Comments close on 25 October 2026, and IRDAI must publish draft regulations for another round of comments before anything changes.

What is proposed

• Lower limits on what insurers can spend on running costs, falling over five years.
• Commission caps that vary by product and sales channel. Tied agents get higher caps than large distribution companies.
• A suitability check before every sale, and a recorded needs analysis for larger policies.
• Commission clawed back on mis-sold or cancelled policies, and each policy tagged to the person who sold it.
• Simple one-page product sheets, and a ban on hiding prices until you hand over personal details.

What it means for you as a policyholder

• Your current policy does not change. These are proposals for future sales.
• You should get clearer product information and a documented reason for what you are sold.
• Commission will not be shown to you for most retail policies; the paper limits that to some large commercial and bank-negotiated group policies.

What the regulator has said

On 15 October 2026, IRDAI Chairman Ajay Seth said: "The intent is not to disrupt any business model, the attempt is to have an orderly transition to a better system."

My view as an agent

Most of this is good for policyholders. I have asked IRDAI for a few changes that I believe also help clients: letting agents offer more than one insurer per segment, rewarding agents whose clients keep renewing, and a fair hearing before any mis-selling record is published.

Sources: Khaitan & Co summary, 29 Sep 2026; Business Standard, 15 Oct 2026. General information only, not personal advice. Insurance is the subject matter of solicitation.