IRDAI Chairman Ajay Seth Pushes Cheaper, Easier Insurance Distribution: What Buyers Gain

IRDAI Chairman Ajay Seth has said insurance needs to become more affordable and easier to buy, with distribution reform at the centre of the discussion, according to an exclusive interview reported by ET Now. For policy buyers, the message is about direction: the regulator wants the cost and effort of getting cover to fall.

The headline does not, on its own, change any premium or rule today. Any effect on what you pay will depend on specific measures that the regulator and insurers announce later, and BankCreds will track those as they are reported.

This article explains how insurance distribution works in India, why it affects price and access, what buyers can realistically expect, and what to do now. Where the source reporting does not give specifics, we say so rather than guess.

Key takeaways

• ET Now reports that IRDAI Chairman Ajay Seth wants insurance to be more affordable and easier to buy, with distribution reform in focus.
• No specific premium cut, commission cap or effective date is established by the headline alone, so existing policies and current quotes are unchanged.
• Distribution cost, meaning commissions, agent and broker payouts and marketing, is one component of the premium, so reform can help price but is not the only lever.
• Easier buying is likely to matter more to many households than a small price change, because underinsurance is the larger financial risk.
• Buyers should keep comparing exclusions, waiting periods and claim settlement, and should not postpone a needed purchase waiting for reform.

What was reported and what we do not know

According to reporting by ET Now, IRDAI Chairman Ajay Seth spoke about making insurance more affordable and simpler to buy, and linked this to reform in how insurance is distributed. The report was described as exclusive.

That is the extent of what we can responsibly state. We have not seen the full interview, so we are not quoting any figures, proposals or timelines from it. If you read a claim online that attributes a specific commission cap, a new product category or a deadline to this interview, check it against the original report and the regulator's own notifications before acting on it.

What we can do is explain the standing background: how policies reach buyers, why that route adds cost, and which reforms of this kind typically look like in practice.

How insurance distribution works in India today

Most people do not buy insurance directly from the insurer. Policies reach them through a mix of channels, each with its own economics.

• Individual agents: licensed individuals who sell on behalf of insurers and earn commission, often paying particular attention to life and savings-linked products.
• Banks and other corporate agents: branches that offer insurance to their own customers, commonly at the time of a loan, deposit or card sale.
• Brokers: licensed intermediaries who can compare products across insurers and act for the customer.
• Online platforms and aggregators: websites and apps where a buyer compares quotes and completes the purchase digitally.
• Direct sales: the insurer's own website, app or sales team.

Every channel costs money to run. Agents and intermediaries are paid commission, usually as a percentage of the premium, and it is highest in the first year for many life products. The regulator sets rules on how much insurers may spend on expenses of management and on commission structures. Those costs are built into the premium the buyer pays, though buyers rarely see them as a line item.

This is why distribution sits at the heart of the affordability debate. A large part of what you pay does not go to claims. It goes to acquiring you as a customer and servicing the sale.

Why affordability and ease of buying go together

Insurance is a product most people do not seek out. It is bought when someone explains why it matters, which is why the industry leans on commissioned sellers. If a simpler, cheaper way to reach buyers exists, both price and reach can improve. If sellers are paid less without an alternative way to reach customers, fewer people may be approached.

The trade-off can be summarised as follows. The figures below are illustrative bands to show the logic, not data from the ET Now report.

Aspect	Heavily commission-led sale	Simpler, lower-cost sale
Who explains the product	Agent or bank staff	Digital journey plus optional advice
Distribution cost share of premium (illustrative)	Higher, for example 15% to 30% on some products	Lower, for example under 10%
Buyer effort	Meetings, paperwork, follow-up	A few steps online or at a service point
Risk to the buyer	Being sold a product that pays the seller more	Buying without understanding exclusions
Reach in small towns	Depends on local agents	Depends on phones, connectivity and trust

The point is that no single design removes all risk. Cheaper sales work best when the product is standard and easy to understand, such as basic term cover or a straightforward health plan. Complex savings-linked products are where advice still earns its cost.

What could change for buyers

Without the specifics of any proposal, it is safest to talk about the kinds of outcomes distribution reform aims at. Here is a simple worked example with assumed numbers, to show the scale of possible savings.

Suppose a family floater health policy costs Rs 24,000 a year. If 12% of that premium is distribution cost, that is Rs 2,880. If a reform lowered the distribution share to 9%, the cost component would fall to Rs 2,160, a difference of Rs 720 a year. Over ten years at an unchanged premium, that is Rs 7,200, and premiums on health cover typically rise over time, so the saving could be larger or smaller.

A second example is term insurance. A healthy 30-year-old non-smoker may pay in the region of Rs 10,000 to Rs 14,000 a year for Rs 1 crore of cover, depending on insurer, term and underwriting. If distribution costs fall by even a small margin, the saving is a few hundred rupees a year. Meaningful, but not life-changing.

Illustrative case	Assumed annual premium	Assumed distribution share	Saving if share falls by 3 percentage points
Family floater health policy	Rs 24,000	12% to 9%	Rs 720
Term cover of Rs 1 crore	Rs 12,000	10% to 7%	Rs 360
Personal accident cover	Rs 2,000	20% to 17%	Rs 60

These figures are our own arithmetic on assumed inputs, not reported measures. They show that the largest gain from reform is likely to come from more people being covered at all, rather than from a large price drop per policy.

Who is affected and who is not

Likely to be affected: first-time buyers, who face the most confusion; people in smaller towns with few advisers nearby; gig and self-employed workers without employer cover; and anyone who has been sold a policy bundled with a loan or savings product without asking for it.

Less directly affected: people who already hold adequate cover and are past the waiting periods. Their premiums and terms are set by the contract they signed. Changes in distribution rules do not rewrite existing policies.

Worth watching: agents and small intermediaries, whose income depends on commission. Any change in payouts will affect how much time they spend advising customers. Borrowers should also stay alert to insurance offered alongside credit. If you are taking a personal loan or a home loan, the lender may present insurance during the process. That cover should be a choice you understand, not a condition you feel obliged to accept. See our news hub for updates as further details emerge.

What to do now

No action is required because of this report. If you are thinking about buying or reviewing insurance, this checklist holds regardless of any reform.

1. Decide the need first. For most earning households, that means term cover for income replacement and health cover sized for local hospital costs.
2. Compare at least three quotes for the same cover amount, term and add-ons, so you are comparing like with like.
3. Read the exclusions and waiting periods for pre-existing conditions, room rent limits and sub-limits before looking at price.
4. Check the insurer's claim settlement record and grievance process, not just the premium.
5. Use the free-look period. Individual policies come with a window after purchase in which you can cancel if the terms differ from what you were told. Check the exact period in your policy documents.
6. Keep it separate from loans. Insurance sold with a loan should be optional unless the terms clearly say otherwise; ask for it in writing.
7. Budget the premium. Use our EMI calculator to see how a premium fits alongside existing loan payments before committing.

Common mistakes to avoid

• Waiting for a cheaper world. A need you have today is not solved by a reform that may take time. Age and health changes can push premiums up faster than any distribution saving brings them down.
• Choosing on price alone. A very cheap policy with a tight room rent cap or long waiting periods can cost far more at claim time.
• Buying insurance as an investment by default. Products that mix savings and cover often have higher commissions and lower cover per rupee than pure protection plans. Compare the cover-to-premium ratio.
• Not disclosing health history. Easier buying journeys do not make disclosure optional. Non-disclosure is a common reason for claim disputes.
• Treating a headline as a rule. Reported intent from a regulator is not a notified regulation. The binding position appears in the regulator's circulars and regulations, which you can check on the IRDAI website.

Frequently asked questions

Will my insurance premium fall because of this announcement?

Not automatically. The report, as described by ET Now, is about direction and reform of distribution, and does not by itself change any premium. Any future effect would depend on specific measures and on whether insurers pass savings on to customers.

Does distribution reform affect my existing policy?

Generally no. Your existing policy is a contract with fixed terms. Changes in how policies are sold mainly affect new sales, though renewal terms can change within the limits allowed by the regulator and the policy conditions.

Is buying insurance online better than through an agent?

It depends on you. Online purchase can be cheaper and faster for standard products if you are comfortable reading the terms yourself. An agent or broker can help if you need advice on a complex need, but you should still verify the exclusions in writing.

Where can I check official insurance rules?

The insurance regulator, IRDAI, publishes its regulations and circulars on its official website. That is the place to confirm any binding change, rather than relying on summaries of interviews.