Insurance broker commission in India: what changes under IRDAI’s proposal

Brokers would become “insurance distribution entities” and, on most retail products, would be allowed lower commission than an individual agent selling the same policy. The brokers’ association says that could cut broker revenue by 60–70%. IRDAI says insurers should compete on price, not on what they pay distributors.

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

Photo: Amina Atar / Unsplash

17 → 3Licence types folded into three: entities, persons and market infrastructureIRDAI paper Khaitan & Co via Mondaq

5% vs 10%Health renewal cap: distribution entity vs agentIRDAI Box 4A: general insurance maximum commission limits

60–70%Broker revenue hit, as estimated by IBAI (its own estimate)Business Standard

798Licensed insurance brokers, according to IBAIBusiness Standard

What changes for brokers

Brokers, corporate agents, OEM brokers, IMFs, web aggregators and CSC-SPVs would all register as insurance distribution entities (IDEs). IRDAI paper
Every reward, incentive and reimbursement counts toward the cap, and each policy is tagged to the person who sold it. IRDAI paper Khaitan & Co via Mondaq
Premium and claims would flow directly between customer and insurer, as reported. Khaitan & Co via Mondaq

Broker and agent caps compared

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%
Motor OD, old vehicle	10%	15%
Motor TP, new vehicle	Nil	2.5%
Retail property, first year	15%	20%
Miscellaneous, corporate / group	10%	15%

The arguments

IBAI estimates a 60–70% revenue hit and about 10 lakh livelihoods at risk, and has asked for an impact study, a glide path and a later deadline. These are its own estimates. Business Standard Business Standard
IRDAI Chairman Ajay Seth says insurers must compete on price rather than on distributor commission. Business Standard interview with IRDAI Chairman

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

Will brokers earn less than agents?

On most retail lines, yes. In Box 4A the cap for distribution entities is below the agent cap: for example individual health renewal 5% vs 10%, and new-vehicle motor third-party nil vs 2.5%.

What is an insurance distribution entity (IDE)?

It is the proposed single licence for companies and firms that distribute insurance. Brokers, corporate agents, IMFs, web aggregators and similar entities would move into it.

What has IBAI said about the paper?

The Insurance Brokers Association of India estimates a 60–70% fall in broker revenue and about 10 lakh livelihoods at risk, and asked IRDAI for more time and an impact assessment.

Can brokers still charge customers a fee?

The paper asks whether the sector is ready to move from commissions paid by insurers to fees paid by customers (Question 18). It is an open question, not a rule.

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 →