#IRDAI just released a consultation paper that could reshape how insurance is sold in India.
Could this impact Policybazaar, life insurers, banks and the broader insurance distribution ecosystem?
Key proposals include:
• Tighter commission structures across products and distribution channels
• Lower Expense of Management limits for insurers over the next five years
• Greater scrutiny of high commissions, incentives and distributor payouts
• Measures to curb mis-selling and forced bundling of insurance with loans
• A push towards more transparent and digital insurance distribution through Bima Sugam
Why is IRDAI looking at this?
Between FY23 and FY25, premiums generated through a sample of corporate agents grew around 28%, while distributor remuneration jumped nearly 125%.
If implemented, these changes could materially alter the economics for banks, insurance distributors, web aggregators and insurers.
The market has already reacted, with PB Fintech (Policybazaar) shares coming under pressure as investors assess the possible impact of lower commissions.
Important: this is still a consultation paper, not a final regulation.