IRDAI Insurance Reforms are gaining attention after Insurance Regulatory and Development Authority of India Chairman Ajay Seth criticised dynamic pricing on digital insurance platforms and warned that excessive sales commissions could reduce value for policyholders.
Speaking at the Business Standard BFSI Insight Summit in Mumbai on October 27, 2026, Seth emphasised transparent insurance pricing, lower distribution costs, and improved consumer protection.
His comments came as IRDAI reviewed proposed changes to insurance commissions and insurers’ operating expenses. The regulator has extended the public consultation deadline to October 31, 2026.
The proposals remain under consideration, and no final changes to commission limits have been announced.
Key Highlights
- IRDAI Chairman: Ajay Seth raised concerns over dynamic insurance pricing.
- Digital Platforms: Customers should be able to compare premiums without sharing personal information.
- Insurance Commissions: The regulator is considering lower distribution payouts.
- Health Insurance: High commissions could contribute to premium pressures.
- Consultation Deadline: October 31, 2026.
- Implementation: Final regulations have not yet been issued.
IRDAI Insurance Reforms: Key Details
| Details | Information |
|---|---|
| Regulator | Insurance Regulatory and Development Authority of India |
| Chairman | Ajay Seth |
| Announcement discussed | October 27, 2026 |
| Event | Business Standard BFSI Insight Summit |
| Location | Mumbai |
| Main concerns | Dynamic pricing and high commissions |
| Consultation paper | Recalibrating Economics of Insurance Distribution |
| Paper released | September 23, 2026 |
| Feedback deadline | October 31, 2026 |
| Current status | Proposals under consultation |
Why Did the IRDAI Chief Criticise Dynamic Insurance Pricing?
IRDAI Chairman Ajay Seth questioned the use of airline-style dynamic pricing on digital insurance platforms.
Dynamic pricing generally refers to prices changing in response to factors such as demand, timing, or purchasing behaviour.
Seth argued that insurance comparison platforms should prioritise transparent premiums and help customers evaluate competing products fairly.
He also raised concerns about platforms requiring mobile numbers or other personal details before displaying insurance prices.
According to Seth, customers should be able to compare basic policy information without first becoming sales leads.
His remarks focused on digital pricing and distribution practices. They should not be interpreted as a ban on legitimate risk-based insurance underwriting.
What Changes Has IRDAI Proposed for Insurance Commissions?
The IRDAI Insurance Reforms consultation proposes changes to how insurance agents, brokers, banks, and other distributors receive commissions.
Currently, selling expenses can account for a significant portion of insurance premiums.
Seth said average health insurance commissions across new and renewal business were approximately 24%. The proposed framework seeks to bring commissions down to around 15–20%, depending on the applicable category and structure.
IRDAI is considering higher commissions for acquiring new customers and lower payouts for policy renewals.
The objective is to align distributor compensation more closely with the services provided while reducing unnecessary acquisition expenses.
However, these figures are proposals and industry averages, not newly implemented commission limits.
Proposed Changes to Insurance Companies’ Expenses
IRDAI has also proposed reducing the expenses of management (EoM), which include certain administrative and distribution costs incurred by insurance companies.
| Insurance Segment | Proposed Expense Limit |
|---|---|
| Life insurance | 15% within two years |
| Life insurance | 12.5% within five years |
| General insurance | 25% within two years |
| General insurance | 20% within five years |
The proposals use defined premium-income measures, and the applicable calculation methods differ between insurance segments.
The regulator’s intention is to improve cost efficiency and preserve more premium income for insurance benefits and claims.
These limits have not yet become final regulations.
How Could IRDAI Insurance Reforms Affect Policyholders?
If implemented, the proposed reforms could influence how consumers compare, purchase, and renew insurance policies.
Potential benefits include:
- Greater pricing transparency: Easier access to policy information before sharing contact details.
- Lower distribution costs: Reduced commissions could improve insurers’ cost structures.
- Improved product comparisons: Customers may find it easier to evaluate coverage and exclusions.
- Better renewal practices: Commission changes could encourage more attention to long-term customer service.
- Stronger consumer protection: Reduced emphasis on aggressive insurance selling.
However, lower commissions do not automatically guarantee cheaper premiums.
Insurance prices also depend on claim costs, medical inflation, risk assessment, and other operating expenses.
Why Is IRDAI Concerned About Health Insurance Portability?
Health insurance portability allows eligible policyholders to switch insurers while retaining certain continuity benefits, subject to applicable rules.
Seth expressed concern that commission arrangements could influence how distributors recommend switching insurance companies.
He noted that portability activity was concentrated among a relatively small number of insurers, raising questions about whether distribution incentives were shaping customer decisions.
IRDAI is examining whether commissions on ported policies should be aligned with renewal commissions.
The aim is to discourage unnecessary switching driven primarily by financial incentives rather than customer needs.
What Are the Concerns of Insurance Agents and Companies?
Insurance industry representatives have raised concerns that reducing commissions too sharply could affect distribution networks, particularly in smaller towns and rural areas.
Agents often provide assistance with insurance purchases, renewals, documentation, and claims.
Industry groups have also argued that rising hospital expenses and vehicle repair costs contribute significantly to insurance premium increases.
IRDAI has acknowledged the need to consult stakeholders before finalising the framework.
The regulator is therefore examining how to balance lower distribution costs with continued insurance access and adequate customer service.
When Will the New IRDAI Insurance Rules Take Effect?
The consultation paper was released on September 23, 2026.
After receiving more than 650 responses, IRDAI extended the feedback deadline from October 25 to October 31, 2026.
The regulator will review stakeholder submissions before deciding whether to revise the proposals and issue draft or final regulations.
Consequently, policyholders should not assume that existing commissions, premiums, or renewal terms have already changed.
Interested stakeholders can review the consultation material and submit feedback through the designated portal.
Conclusion
The IRDAI Insurance Reforms discussion reflects growing regulatory attention to insurance affordability, digital transparency, and high distribution costs.
Chairman Ajay Seth’s concerns about dynamic pricing and excessive commissions highlight the need for insurance platforms and distributors to prioritise policyholder interests.
However, the proposals remain under consultation. Their final impact on premiums, insurance agents, and customer experiences will depend on the regulations IRDAI eventually adopts.
