IRDAI distribution paper 2026 explained: commission caps, EoM, licensing

In 60 seconds

One licence architecture. Today's intermediary types fold into Insurance Distribution Entities (IDEs), Insurance Distribution Persons (IDPs) and Market Infrastructure Institutions (MIIs) such as Bima Sugam.^[1]^[3]
Hard commission caps return by segment, line and channel. Every reward, incentive and reimbursement counts toward the cap.^[1]^[3]
Lower expense limits. General insurers' EoM limit moves from 30% of GWP to 20% of domestic GDPI over five years, via 25% within two years as reported.^[1]^[3]^[4]
Motor moves toward MIIs: lower caps on mandatory third-party cover, and dealers must show an MII option.^[3]^[4]
Conduct: no forced bundling with loans, commission clawback on proven mis-selling, and every policy tagged to its seller.^[1]^[5]

Key numbers

25 Oct

Last date for comments (2026). An extension was requested but not confirmed.^[1]^[8]

30→20%

General insurer EoM limit over five years (30% of GWP to 20% of domestic GDPI).^[1]

+259%

Growth in motor commission, FY23 to FY25, vs ~34% growth in motor premium, as reported from the paper.^[6]

17→3

8 entity and 9 individual licence types consolidate into IDE, IDP and MII, as reported.^[5]^[3]

Before vs after

Area	Today	Proposed
Commission	Set by each insurer's Board-approved policy within an overall EoM limit (since 2023–24)	Statutory caps by segment, line, channel and premium type; all remuneration counts^[1]^[3]
EoM limit (GI)	30% of gross written premium	20% of domestic GDPI within 5 years (25% within 2 years, as reported); glide path from FY2027-28^[1]^[3]^[4]
Licence types	Brokers, corporate agents, IMFs, web aggregators, CSCs, MISPs and others, each with its own regime	IDE (entities), IDP (agents, associates, specified persons, PoSPs), MII (platforms)^[3]^[5]
Motor TP, new vehicle	Within insurer's commission policy	Nil for IDEs, 2.5% for agents, as reported^[3]^[4]
Loan-linked insurance	Bundling with credit is common	Compulsory bundling prohibited; volume-linked incentives for bank and NBFC staff barred^[1]^[7]
Mis-selling	Case-by-case action	Formal definition, commission clawback, seller identity tagged to each policy^[1]^[6]
Premium & claims flow	Can pass through intermediaries	Paid directly between customer and insurer; third-party payments barred, as reported^[3]^[5]

General insurance commission caps Checked against Box 4A

Proposed caps as a % of premium, from the paper's Box 4A (General Insurance – Maximum Commission Limits)^[19], matching Khaitan & Co's summary^[3]. Property and engineering caps apply slab-wise on a probable-maximum-loss basis. Government schemes: as notified in the scheme. Rural and small-town uplift for individual policies: an extra 10% of the applicable first-year cap for towns and cities with population below 10 lakh, and 20% for towns below 50,000 and all rural areas.^[19]

Product	IDE	Agent / Associate
Motor TP, new vehicle	Nil	2.5%
Motor OD/PA/LL, new vehicle	5%	10%
Motor TP, old vehicle	2.5%	5%
Motor OD/PA/LL, old vehicle	10%	15%
Individual health, first time	15%	20%
Individual health, renewal or porting	5%	10%
Group health	2.5% (max ₹1 cr)	5% (max ₹1 cr)
Retail property, first time	15%	20%
Retail property, renewal	10%	15%
Property & engineering, SI < ₹500 cr	7.5%	10%
Property & engineering, SI ₹500–2,500 cr	6.25%	7%
Property & engineering, SI > ₹2,500 cr	5%	5.5%
Marine cargo	10%	15%
Marine hull	10%	10%
Miscellaneous, retail	15%	17.5%
Miscellaneous, corporate/group	10%	15%

What changes, by theme

Licensing architecture

Entities become IDEs and individuals become IDPs: agents, associates, specified persons and PoSPs.^[3]
Reported: IDE capital ₹10 lakh; a lien-marked deposit of 0.1% of the previous year's commission income (₹10 lakh to ₹10 crore); permanent registration.^[3]
Distributors may also offer non-insurance products and services (Q9, Q12).^[2]

BrokersCorporate agentsWeb aggregatorsPoSPs

Commission caps & expenses of management

Caps by segment, line, channel and premium type; incentives, reimbursements and non-cash benefits all count toward them.^[1]^[3]
EoM base moves to domestic GDPI (excluding inward reinsurance); the separate allowances for technology, rural and similar spend are absorbed into the limit, as reported.^[3]
Reported: missing EoM targets could limit new products and dividends.^[4]

InsurersAll distributors

Motor and dealers

Data note: the paper gives two different shares for OEM brokers and MISPs. Part 1 (¶141) says they hold 30% of motor premium at an average 24% commission (₹29,000 crore of premium, about ₹7,050 crore of commission in FY25). Part 2 (§2.2.5) says MISPs account for 46% of total motor premium, and Financial Express quotes the 46%. Cite the specific paragraph you rely on.^[19]
Motor policies move toward MIIs such as Bima Sugam; reported 5% ceiling on MII platform fees.^[3]
Dealers must display the MII option and may not refuse cashless repair because a policy was bought elsewhere, as reported.^[3]
The paper asks whether the MII option should be mandatory for new vehicles, with opt-out (Q27).^[2]

Motor dealers / MISPsOEM brokersInsurers

Bancassurance & bundling

Compulsory bundling with loans is prohibited, except where the customer gets a demonstrable benefit.^[1]^[3]
Volume- or reward-linked incentives for bank and NBFC staff are barred.^[7]
IRDAI's data identifies bancassurance as one of the costliest channels.^[8]

Banks / NBFCsCorporate agents

Conduct & accountability

Commission clawback on proven mis-selling; twelve illustrations of mis-selling in the paper, as reported.^[3]
Every policy tagged to the selling individual; suitability analysis above a ticket size.^[3]
Cost audit for insurers, and for IDEs above reported revenue thresholds.^[3]^[5]

All distributorsInsurers

Market infrastructure (Bima Sugam, PIR)

A Public Insurance Registry as digital public infrastructure behind MIIs; Bima Sugam is the first MII, as reported.^[3]
The paper asks which services stakeholders want on these platforms (Q28).^[2]

InsurtechsInsurersPolicyholders

Timeline

23 SEP 2026Consultation paper and press release issued.^[1]

31 OCT 2026Last date for comments, extended by IRDAI on 24 Oct from 25 Oct. IRDAI said it had received over 650 comments. IBAI had asked for more time, as reported earlier.^[20]^[8]^[9]

NEXTDraft regulations, with a further round of feedback, as reported.^[10]

1 JAN or 1 APR 2027Start dates reportedly under consideration for the caps. Not final.^[10]

FY2027-28 →EoM glide path begins (Year 1), as reported; 20% within five years.^[3]

Who is pushing back, and why

Insurance Brokers Association of India

Critical

IBAI estimates a 60–70% revenue hit for brokers and about 10 lakh livelihoods at risk; these are its own estimates, not independent forecasts. It wants an impact assessment, a glide path, a deadline at the end of December and meetings with the PM and FM.^[8]^[9]^[11]

PoSP platforms

Critical

Want commission parity with individual agents and the ability to charge insurers for technology platforms. IRDAI is reported to oppose tech fees over and above commission.^[12]

Motor dealers (FADA)

Critical

Say dealers support customers through the policy term and that around 5% commission is hard to sustain.^[13]

Insurers & banks

Mixed

Insurers question how current distribution costs were calculated and want a phased rollout; banks are assessing the fee-income impact, and the RBI will send its views.^[8]^[14]

IRDAI

Pro-reform

Chairman Ajay Seth says insurers must compete on price rather than distributor commission and that input with sound economic logic will be weighed. Member Girija Subramanian says large-scale job losses are not expected.^[15]^[16]

Markets

Reaction

Insurance distributor stocks fell sharply after the release: PB Fintech closed about 36% lower on day two and Turtlemint hit its lower circuit, as reported.^[17]^[20]

Open questions

Clawback periods and percentages
How brokers and corporate agents are treated separately within the IDE category
Specific PoSP commission terms
Treatment of commission already earned on multi-year policies
The final effective date

Compiled from public reports; the paper may address some of these.

Your turn

IRDAI asked 32 questions. Answer the ones that matter to you.

Our builder turns your view, whether you support, oppose or want changes, into a structured, formal response in about 3 minutes.

Write my response

How to respond

Official route: fill in IRDAI/IIB's Excel template and upload it on the consultation portal at iib.gov.in/dr, as the template's own instructions say.
Template layout: an Instructions sheet plus 14 section sheets holding Q1–Q32, with your answer going in column C. Questions are optional. Limits are 300 words per question and 1,000 for Q32. The template says not to rename sheets or change headers.
Identification: the template requires first name, last name, email and a stakeholder category picked from 16 options.
Email: send the completed Excel template to drfeedback@iib.gov.in with the subject line "Reforms for Recalibrating Economics of Insurance Distribution", as given in IRDAI's press release of 24 Oct 2026.^[20] Use one mode only.

Fill the official template in 2–5 minutes →