Bancassurance under IRDAI’s proposal: lower caps and no forced bundling

Banks sell insurance as corporate agents, and the paper treats them as distribution entities with the lower caps that go with that. It would also stop lenders making insurance a condition of a loan and bar volume-linked incentives for bank and NBFC staff. Banks are now counting the cost.

Updated 24 Oct 2026 · Comments to IRDAI close 31 Oct 2026

Photo: Gabrielle Henderson / Unsplash

13% vs 33%Average banca payout: single-insurer tie-up vs multiple tie-ups (life, per Part 2)Khaitan & Co via Mondaq

₹20,000 cr+Banks’ bancassurance income pool, about 10% of their fee incomeThe New Indian Express

50–60%Fall in bancassurance income estimated by RBL BankBusiness Standard

~33%Decline in banca fees expected by Central Bank of IndiaThe Economic Times

What changes for banks and NBFCs

Compulsory bundling of insurance with loans is prohibited, except where the customer gets a demonstrable benefit. IRDAI paper Khaitan & Co via Mondaq
Volume- or reward-linked incentives for bank and NBFC staff are barred. Moneycontrol
Banks distributing for several insurers face the lower distribution-entity caps. The Hindu BusinessLine IRDAI Box 4A: general insurance maximum commission limits
Banks are assessing the fee-income impact. Business Standard

Caps that apply to banks as distribution entities

Proposed maximum commission, % of premium. Source: IRDAI Box 4A: general insurance maximum commission limits
Product	Distribution entity	Agent
Individual health, first year	15%	20%
Individual health, renewal	5%	10%
Retail property, first year	15%	20%
Group health	2.5% (max ₹1 cr)	5% (max ₹1 cr)

Where do you stand?

The questions IRDAI is asking on this topic. Tap once to react; comments appear after review.

All 32 questions →

Questions people ask

Can a bank force me to buy insurance with a loan?

Under the proposal, no. Compulsory bundling of insurance with credit would be prohibited, unless the customer gets a demonstrable benefit. Question 24 asks whether the paper’s examples of acceptable packaging are right.

Are banks treated as brokers or agents?

Banks act as corporate agents today. Under the proposal, corporate agents become insurance distribution entities, with the same caps as brokers.

How much could banks lose?

Banks’ own estimates vary. RBL Bank expects a 50–60% fall in bancassurance income and Central Bank of India about 33%, as reported.

These are proposals, not final rules. Summaries are in our own words; check figures against IRDAI’s paper before relying on them. Full explainer of the paper →