The Insurance Brokers Association of India has requested more time to review the regulator's new insurance distribution proposals. The industry body warns that planned commission caps could disrupt business and threaten 10 lakh jobs, leading to market volatility for major insurance distributors.
The Insurance Brokers Association of India (IBAI) has formally asked the regulator for more time to review the recent consultation paper titled "Recalibrating Economics of Insurance Distribution." The association wants the deadline for industry feedback, currently set for October 25, 2026, to be extended until December. This request follows the release of the IRDAI’s paper on September 23, which proposed significant changes to how insurance products are sold and how expenses are managed across the industry.
The industry's primary concern involves proposed limits on insurance commissions and a reduction in Expense of Management (EoM) limits. Brokers argue that the proposed rigid commission caps could reverse progress made since 2023, when previous sub-caps were removed to allow insurers more operational flexibility. By putting a hard ceiling on these costs, intermediaries fear they may lose the ability to maintain their current business models, particularly for low-value or rural policies that require higher servicing costs.
A significant point of contention is the potential impact on jobs and the distribution network. The IBAI has highlighted that these changes could endanger up to 10 lakh livelihoods across the distribution ecosystem over the next five years. There is also a concern that if the cost structure becomes too tight, it may discourage intermediaries from operating in Tier-II and Tier-III cities, potentially slowing down the expansion of insurance reach in these regions.
Investors have already reacted to these proposals, with shares of listed insurance distributors like PB Fintech experiencing notable price volatility following the initial announcement in late September. The market is highly sensitive to these regulatory updates because any reduction in commission structures directly impacts the revenue models of companies that rely on insurance distribution as their primary business.
The IBAI has escalated its concerns to the Finance Ministry, calling for a transparent, published impact assessment before any final rules are implemented. The association maintains that such a study is necessary to understand how these changes will specifically affect public-sector insurers, foreign investments, and the end consumer. Moving forward, the key monitorable for both the industry and market participants will be whether the regulator grants the requested extension and what the final guidelines reveal about the future of commission structures.