IRDAI, the insurance regulator, has proposed new rules on commissions. According to reporting by Livemint, these rules could distort competition in the insurance market.
For you, this matters because commissions shape who sells a policy and which one they push. Nothing changes in your premium today. These are proposals, and the final rules may differ.
Key takeaways
- IRDAI has proposed commission rules, as reported by Livemint.
- Livemint reports the rules could tilt the market and weaken fair competition.
- Your current policies and premiums don't change because of a proposal.
- Commission can push sellers toward certain plans, so ask questions before you buy.
- Compare plans on cover, claim record and cost, not on the seller's advice alone.
How insurance commissions work in simple terms
When you buy a policy through an agent or a bank, the insurer pays that seller a fee. This fee is called a commission. It's usually a share of your premium, which is the money you pay for the cover.
A regulator sets limits on how much an insurer can pay. The idea is to stop high payouts from pushing sellers toward the wrong product. Commission rules also shape who can compete. Big insurers with large sales networks may cope with limits more easily. Small insurers may struggle to attract sellers.
That's the worry behind the headline. A rule meant to protect buyers can end up favouring some companies. We don't have the full details of the proposal, so treat this as a risk, not a certainty.
Commission isn't bad by itself. Agents do real work, like explaining terms and helping with claims. The problem starts when pay, not fit, drives the advice.
What could change for you
Here's a simple example. Say you buy a health plan with a yearly premium of ₹30,000. The rates below are made up to show the idea.
| Commission rate | Seller earns on ₹30,000 | Gap from lowest |
|---|---|---|
| 5% | ₹1,500 | ₹0 |
| 10% | ₹3,000 | ₹1,500 |
| 15% | ₹4,500 | ₹3,000 |
| 20% | ₹6,000 | ₹4,500 |
A seller who earns ₹6,000 on one plan and ₹1,500 on another has a reason to prefer the first. That plan may not suit you better. If new rules change these rates unevenly, sellers may shift which plans they offer. Some insurers could also find it harder to reach customers.
The effect on your premium isn't clear from the headline. Lower selling costs can mean cheaper plans over time. Less competition can do the opposite.
Who is affected
Most directly affected are insurers, agents, brokers and banks that sell policies. Buyers feel the effects later, through choice and price.
You may be affected if you:
- Plan to buy term, health or motor insurance this year.
- Get insurance offered along with a loan, such as a home loan.
- Rely on one agent or one bank for all your advice.
Existing policyholders are not hit directly. Your cover, premium and claim rights stay as they are. You can read more about loans and cover in our home loan guides.
What to do now
You don't need to rush or panic. A few habits protect you in any market.
- Ask the seller how much commission they earn on the plan.
- Compare at least three plans on cover, exclusions and claim settlement record.
- Never feel forced to take insurance just to get a loan approved.
- Check that the insurer is registered on the IRDAI website.
- Follow updates on our news hub as the final rules come out.
Frequently asked questions
Will my insurance premium go up because of this?
Not right now. These are proposed rules, and your current premium stays the same. Any effect on prices would come later and isn't clear yet.
What is a commission in insurance?
It's the fee an insurer pays to an agent, broker or bank for selling a policy. It's usually a share of your premium.
Can I ask my agent about their commission?
Yes, you can ask. A good adviser will explain why they recommend a plan. Compare it with other plans before you pay.
BankCreds analysis
This is a proposal, so it's less urgent than the headline sounds. Nothing in your policy or premium changes this week.
Where the real impact lies
The bigger issue is advice. Take a family paying ₹30,000 a year for health cover. A 10% commission is ₹3,000 a year to the seller. Over five years, that's ₹15,000 built into the price, if the premium stays flat.
Rules that trim this can lower costs. Rules that favour big sellers can hurt smaller insurers, which may offer fresher or cheaper plans.
The over-reading to avoid is thinking rules alone will end mis-selling. Your best protection stays the same. Compare plans, ask about commission and read the exclusions before you pay.
This section is BankCreds' own assessment of what the development means for Indian borrowers and savers. It is independent commentary, not part of the source reporting above.
Sources & references
- Livemint — originating report https://www.livemint.com/opinion/irdai-insurance-distribution-rules-commission-caps-competition-11793843339647.html
- IRDAI — Insurance regulator that sets commission and conduct rules for insurers https://irdai.gov.in/
Source links are shown as plain text, not clickable links. Copy a URL into your browser to read the original report.
Editorial note & disclaimer
How this was reported. The development above is attributed to the source or sources listed. BankCreds does not independently verify a third party's reporting; where a figure or a regulatory position is stated as fact, it is either attributed or drawn from the regulator's own published material. Everything under "BankCreds analysis" is our own assessment.
Rates and figures. Interest rates, per-gram values and premium bands quoted here are indicative, move daily, and differ by borrower profile, city and lender policy. Confirm the final number with the institution before you act on it — the sanction letter or policy schedule governs, not a news report.
Not financial advice. This article is general information for an Indian audience. It is not investment, tax, credit or insurance advice, takes no account of your circumstances, and BankCreds is not a lender, broker, distributor or advisor. Consider speaking to a SEBI-registered investment adviser or a qualified professional before acting.
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