The Insurance Regulatory and Development Authority of India (IRDAI) will move forward with proposed insurance distribution reforms only after consulting stakeholders and building consensus, Chairman Ajay Seth has said, addressing concerns from insurers and intermediaries about possible changes to commission structures and business practices.
Speaking at the Business Standard BFSI Insights Summit in Mumbai on October 27, 2026, Seth said the regulator was listening to industry feedback and examining concerns raised after the release of its consultation paper on insurance distribution. He also highlighted the need to improve health insurance claims processing, transparency and the overall policyholder experience.
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IRDAI Seeks Consensus on Proposed Reforms
IRDAI’s consultation paper, titled Recalibrating Economics of Insurance Distribution, proposes changes to the way insurance distribution costs and commissions are structured.
The proposals have raised questions among insurance intermediaries and other industry participants about their potential effect on customer servicing, policy renewals and existing business models.
Seth said reforms of this nature require discussion and consensus rather than simply introducing a new set of regulations. The regulator has been engaging with stakeholders to understand their concerns and assess the implications of the proposed changes.
The consultation process is intended to help IRDAI consider industry feedback before deciding on the final approach. The proposals should therefore be treated as under consideration, rather than as rules already in force.
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Commission Structures Under Review
One of the central issues is how commissions should be distributed between the sale of new insurance policies and the renewal of existing ones.
According to reporting on Seth’s remarks, the consultation paper proposes higher commissions for new policies and lower commissions for renewals. The aim is to review distribution costs and improve the efficiency of the insurance market.
Seth noted that acquiring a new customer generally requires more effort than renewing an existing policy. However, the proposed commission levels and their impact on intermediaries remain subjects for discussion.
The consultation has also raised questions about policy portability, where customers move their insurance coverage from one insurer to another. IRDAI is examining whether commission arrangements could influence these decisions and affect customers’ ability to choose suitable coverage.
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Faster Health Insurance Claims a Regulatory Priority
Seth also emphasised the need to expedite health insurance claims and improve the experience of policyholders.
Delays and uncertainty during hospital admission, discharge and claims settlement can create difficulties for customers, particularly when they need access to funds for medical expenses. The regulator wants insurers to provide a more efficient and transparent claims process.
Another concern is the availability of meaningful information about insurers’ performance. Conventional claim settlement ratios do not necessarily explain how quickly claims are processed or how efficiently insurers handle hospital-related approvals.
Improved disclosures could help customers compare insurance products and make more informed decisions. IRDAI has indicated that claims-related transparency will be an important area of regulatory focus.
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Digital Platforms and Customer Transparency
The discussions also covered the role of online insurance aggregators and digital platforms. These services allow customers to compare insurance policies, but Seth stressed that they should remain focused on policyholders’ interests.
He raised concerns about platforms that ask customers to provide personal information, including phone numbers, before displaying premium details. Greater transparency in pricing and product information could make it easier for customers to compare policies without unnecessary barriers.
The proposed Bima Sugam platform is intended to provide a digital marketplace where customers can compare and purchase insurance products. According to recent reporting, motor insurance is expected to be among the first offerings, subject to the required regulatory changes.
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What Happens Next?
IRDAI’s next steps will depend on stakeholder feedback and the regulator’s assessment of the proposed changes. The deadline for comments on the consultation paper has been extended to October 31, 2026, following a substantial response from industry participants.
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For businesses operating in financial services, regulatory changes can affect distribution costs, customer relationships and compliance requirements. Keeping track of formal notifications and implementation timelines is therefore important for planning and risk management. Appropriate strategic advisory can help businesses assess the wider implications of regulatory and market developments.
Conclusion
IRDAI’s approach signals that the proposed distribution reforms remain open to discussion. Alongside reviewing commissions, the regulator has highlighted faster health insurance claims, clearer disclosures and more transparent digital platforms as priorities.
The eventual outcome will depend on the consultation process and the final regulations issued by IRDAI. Until then, the proposals should not be treated as implemented policy.