The Insurance Regulatory and Development Authority of India (IRDAI) issued a Public Consultation Paper titled “Recalibrating Economics of Insurance Distribution” on 23 September 2026. The paper was released in two parts: Part 1 sets out the proposed reforms, and Part 2 presents IRDAI’s analysis of distribution costs and commission structures across the industry. It aims to simplify insurance distribution, reduce costs, enhance transparency and competition, and align incentives with policyholder interests. IRDAI invited comments from the public, insurers and stakeholders, and the paper contained 32 questions. Corporate Professionals has submitted its comments on these questions:

1. Problems of the Insurance Sector (Section 3)

Question 1 – Are the identification and analysis of problems impacting the sector appropriate? Which are the most pressing problems of the sector requiring reforms and regulatory interventions?

We broadly agree with IRDAI’s diagnosis. Premiums have grown only in line with the economy, and insurance coverage has stayed broadly flat.[1] In our view, the most pressing problem is captive sales, where customers buy insurance along with a loan or a vehicle and have little chance to draw comparison in terms of premium charges, claim ratio and attendant services. For example, NBFCs (non-bank lenders) receive total pay-outs of around 42% of the premium on new life insurance policies they sell, mostly with loans.[2]

Reforms should target conduct in these captive settings, rather than treat whole categories of distributors differently. Customers buying a loan or a vehicle would be told that they have a choice of buying cover from any other insurer and he is appropriately assisted with comparative data of each insurer. IRDAI itself sees such price-led competition as a way to strengthen market discipline.[3]

2. Analysis of Distribution Costs (Part 2)

Question 2 – Do you agree with the analysis of the current distribution cost in Part 2 of the consultation paper? Please suggest specific measures to make the distribution cost-effective.

Part 2 shows that commission has grown faster than premium. In general insurance (non-life insurance, such as motor, health and property), premium sold through brokers grew by 37% between FY23 and FY25, while brokers’ commission grew by 173%.[4] The analysis is presented mainly by type of distributor. It says less about how customers fare in each channel. IRDAI’s own data suggests that outcomes differ: in life insurance, 51% of policies sold by brokers are still in force in the 61st month, against 47% for agents.[5]

IRDAI should measure and publish outcomes for customers by channel, such as persistency, complaints and help with insurance claims. Rules could then be based on how well each channel serves customers, rather than on the type of distributor. Channels with poor outcomes could be addressed directly, without penalising those that serve customers well.

3. Strategic Framework for Distribution Reforms (Section 5)

Question 3 – Does the proposed strategic framework adequately address the sector’s problems and needs? Or are there other areas that should be looked into?

The ten objectives are sound.[6] Objective 1 calls for “same activity, same regulation”. However, the proposed structure applies the same rules to distributors with the same legal structure, such as companies or individuals.[7] As a result, a broker and an agent selling the same policy can face different rules.

The framework should judge distributors by the work they do for the customer, not by their legal form. It should also include a principle of competitive neutrality, as the Draft National Competition Policy, 2011 does.[8] Each proposal would be checked against one question: does it treat those doing the same work alike? Proposals that fail would be revised before the regulations are issued. This would keep the framework consistent with IRDAI’s own Objective 1.

Question 4 – Is the proposed framework appropriate to meet objectives of the SBSR Act?

The Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Act, 2025 aims at faster growth, better protection of policyholders, ease of doing business for insurers and intermediaries, and transparency in making regulations.[9] The framework is less aligned with ease of doing business for intermediaries. IDEs would face new duties that do not apply to insurers’ own agents, such as cost audits, public disclosure of accounts and of commission terms with each insurer and certification by their CEO and board.[10]

Each final duty should be tested for proportionality, that is, whether its benefit to customers justifies its cost to distributors. Duties that clearly protect customers would stay. Others could be simplified, or applied only above a size threshold, as the paper already does for cost audits and the disclosure of accounts. This would protect policyholders without raising barriers for smaller distributors.

Question 5 – What further refinement in the proposed reforms could encourage greater competition and strengthen consumer protection?

Distributors doing the same work are treated differently. On health insurance bought by individuals, an IDE may earn up to 15% of the premium in the first year and 5% on renewal, while an agent may earn up to 20% and 10%.[11] Yet an agent acts for the insurer, while IRDAI notes that a broker owes a fiduciary duty to the customer.[12]

Whatever rules IRDAI sets, the same rule should apply to every distributor selling the same product. Distributors would compete on service and advice, not on regulatory advantage. Distributors that let customers compare insurers, which IRDAI finds difficult for customers today, would not be disadvantaged.[13] Customers would benefit from more comparison, which strengthens both upstream and downstream competition and protection of policyholders.

Question 6 – The overall aim of improving insurance coverage needs to be addressed. Are there further areas that regulations can cover to achieve this objective?

Distribution favours easy-to-reach urban and salaried customers. Just 10 States account for 80% to 82% of health policies bought by individuals.[14]

Extra rewards for sales in smaller towns and rural areas should depend on where the customer lives, so that they apply equally to online and in-person sales. The paper links these rewards to business “procured from” such areas, without saying how online sales are counted.[15] Basing them on the customer’s address would let online platforms and PoSP networks earn the same reward for reaching the same customers. More distributors would then compete to serve these areas, and at lower cost.

4. Simplification of Distribution Structure and Scope (Section 6)

Question 7 – Are the principles proposed for the simplification appropriate?

We support the simpler structure and the lower barriers to entry. Principle 2 distinguishes open architecture (selling for many insurers) from closed architecture (selling for one insurer in each category).[16] This distinction then leads to lower caps for open architecture.[17] Yet IRDAI notes that a broker owes a fiduciary duty to the customer.[18]

The distinction should be used for disclosure only, so that customers know whom a distributor represents. It should not be used to treat distributors differently. At the time of sale, a customer would be told whether the distributor sells for one insurer or many, and could weigh the advice accordingly. The rules on pay and conduct would be the same for both, so neither model would gain an advantage from regulation.

Question 8 – As the capital requirements are eased, more players are expected to enter the space. How can it be ensured that new players focus more on uncovered segments and geographies?

Lower entry capital may attract new distributors. To reach underserved areas, however, they need local sellers. A PoSP may work with only one IDE, so a new IDE cannot easily draw on existing local sellers.[19]

PoSPs should be allowed to work with more than one IDE, or to move between IDEs on reasonable notice. A new IDE could work with experienced local PoSPs, instead of building a network from scratch. PoSPs in smaller towns could offer customers products from more distributors. IRDAI already proposes to track the number of active distributors in smaller cities, towns and rural areas, which would show whether the change works.[20]

Question 9 – The proposed structure allows insurance distributors and persons to supply non-insurance products and non-financial services also. Is there a need for safeguards against poor market conduct?

Yes, safeguards are needed.[21] A distributor selling several products could make buying insurance a condition for buying another product, which is known as tying. It could also use customers’ insurance data to sell other products without their consent.

No distributor should make buying insurance a condition for any other product, or the reverse. Insurance data should be used for other products only with the customer’s free consent.[22] Customers would buy each product on its own merits and free will, as IRDAI already proposes for insurance sold with loans. Distributors could still offer several products, but would have to win each sale individually. Applying the same rule to all distributors would keep competition free and fair.

Question 10 – The proposed structure provides an opening for innovative distribution business models to come in without the need to developing special categories through regulatory revisions. However, does the proposed structure adequately accommodate all existing and emerging distribution models, or are there categories of distributors whose business models may fall outside the framework?

The structure largely accommodates existing and new models. Suitability rules require a seller to check that a product suits the customer, and to record reasons if the customer chooses a product other than the one recommended.[23] They assume a sale made with advice. On comparison websites, customers often choose on their own, without a recommendation.

Suitability rules should apply proportionately to purchases that customers make on their own online, for example through clear product information and basic eligibility checks. Online platforms could continue to serve customers who compare and choose for themselves, while full suitability checks would apply wherever advice is given. Customers would remain protected, and online models would not face rules designed for a different kind of sale.

Question 11 – Is the approach for training of distribution persons appropriate in view of the removal of product restrictions?

We support free, standard training content prepared by the Life and General Insurance Councils, the industry bodies of insurers.[24] The paper proposes a unique identity number for every seller, but does not say whether a seller’s training record will move with them to another distributor.[25]

Each seller’s training record should be linked to their unique identity number. A distributor could check a seller’s training online, and hire them without repeating training. Sellers could move to better opportunities more easily. Smaller distributors could recruit trained staff, which would help them compete with larger networks.

Question 12 – To expand insurance, it is necessary to expand the agency force. Allowing all insurance distributors to expand into non-insurance products widens the scope for their operations and revenue streams. What additional non-monetary incentives can be contemplated to achieve this goal?

To grow, distributors need more sellers, and sellers need reasons to join and stay. The paper proposes public records of distributors’ track record and of each seller’s mis-selling.[26]

The seller’s public record should also show good conduct, such as policies kept in force and help given with insurance claims. Customers could choose sellers with good records. Good sellers could build a reputation that moves with them through their unique identity number.[27] This would reward good conduct without extra pay, and make insurance selling a more attractive career. Distributors would also compete to attract sellers with strong records, which would improve service to customers.

5. Expense of Management Framework (Section 7)

Question 13 – EoM has a direct relationship with affordability. A robust EoM framework is necessary for policyholder protection and orderly growth of the sector. What additional safeguards are necessary to address affordability?

EoM limits would lower insurers’ expenses, but the paper does not set out how to check whether the savings reach customers. Premiums for the top-selling products of leading retail health insurers have risen by about 6% to 15% a year.[28]

IRDAI should track and publish premium trends by product as the EoM limits take effect. If expenses fall but premiums do not, IRDAI and the public would see it. Customers could compare premiums more easily, and insurers would face pressure to pass savings on. This works best where customers can compare and switch, which open-architecture distributors and comparison websites help make possible.[29]

Question 14 – Are the proposed EoM limits appropriate to nudge the sector to become cost-effective and affordable?

We do not comment on the level of the limits. Smaller insurers spend a larger share of premium on expenses. Life insurers other than the two largest spend 22% on average, against 10% to 12% for the two largest. General insurers other than the largest spend 29%, against 18% for the largest.[30] The same limits for all may therefore bear hardest on smaller insurers, in a market already dominated by a few large insurers.[31]

Before finalising the limits, IRDAI should assess their effect on smaller insurers and on competition. The assessment would show whether smaller insurers can meet the limits within the proposed five-year path. If not, IRDAI could adjust the path, so that the number of insurers competing for customers is preserved.

Question 15 – Does the sector need a longer timeframe to achieve the proposed norms?

We support the proposed five-year path for the EoM limits.[32] The paper sets out no gradual path for the proposed changes to how distributors are paid.[33] A sudden change could disrupt distributors and the service they give to existing customers.

Changes to distributors’ pay should be introduced in stages, and should not apply to renewals of policies sold before the new rules take effect. Distributors would have time to adjust their business, and customers who already hold policies would continue to receive service. Australia took a similar approach, introducing its changes to commissions on life risk insurance, such as term life cover, over three years.[34]

6. Distribution Commission Framework (Section 8)

Question 16 – Has open architecture served its purpose or is it simply increasing costs without adding any significant value for the end customer? Is there more that can be done in this area than proposed in the consultation paper.

Open architecture continues to serve its purpose. IRDAI finds that customers cannot easily compare products, which weakens price competition, and that online comparison offers the greatest scope for transparent comparison.[35] Yet the proposal gives distributors in open architecture lower caps than agents.[36]

Distributors in open architecture should be treated the same manner as agents for the same product. Any risk that they push particular insurers should be met through suitability rules, disclosure and clawback.[37] Customers would keep access to channels where they can compare many insurers in one place. The UK Competition and Markets Authority has found that comparison platforms improve competition and lower prices.[38] A distributor that pushed unsuitable products would lose its commission, without penalising the whole channel.

Question 17 – Are the principles proposed for the distribution commission reforms appropriate?

We take no position on commission caps as such. Principles 1 and 2 give distributors in open architecture lower caps than distributors in closed architecture selling the same products.[39] This is inconsistent with “same activity, same regulation”.[40] By contrast, Principles 3 and 4 depend on the type of product and the effort involved in selling it.

The type of distributor should not be a basis for different treatment. The type of product and the effort involved, as in Principles 3 and 4, should apply equally to all distributors. Each product would carry one set of rules, whichever distributor sells it. Distributors would compete on service and advice, and any discrimination in pay would reflect the product and the work involved.

Question 18 – Is the sector ready to move from the current arrangement of opaque commissions paid by insurers and unknown to policyholders to a new arrangement of distribution based on fee paid by policyholders directly?

Fees paid directly by customers would increase transparency. However, a sudden, compulsory shift may deter first-time and lower-income buyers, who may be unwilling to pay a fee upfront. At present, IDEs cannot charge customers a fee unless the regulations permit it.[41]

IRDAI should work out an optional model, in which distributors may charge a disclosed fee for advice or service, alongside or instead of commission. The same rules should apply to all distributors, including agents and MIIs. Customers who want paid advice could choose it, while others could buy as they do today. Distributors would compete on both price and service, and the market would show over time whether fee-based advice suits customers, without an abrupt change.

Question 19 – Do the proposed commission limits arrive at a fair balance between policyholders’ expectations of affordability and distributors expectations of adequate remuneration?

We do not comment on the level of the proposed limits. The same product carries different limits depending on the type of distributor. On own-damage cover for a new vehicle, which covers damage to the customer’s own vehicle, a dealer set up as a company may earn up to 5%. A dealer owned by one person and tied to one insurer may earn up to 10%.[42]

Whatever level IRDAI chooses, the same limit should apply to every distributor selling the same product. A single limit for each product would serve IRDAI’s aim of controlling distribution costs, without favouring any channel. Distributors would compete on service rather than regulatory advantage. Dealers would also have no reason to tie up with one insurer simply to earn more.

Question 20 – Within the proposed commission limits, which are the possible measures to incentivize good market conduct? Vice-versa, what measures can be built in to disincentivize bad market conduct?

IRDAI notes that current incentives reward new sales, and give little credit to policies kept in force, service and help with insurance claims.[43]

The performance incentives that the paper allows within the caps should be linked to outcomes for customers, such as policies kept in force, help with claims and few complaints.[44] For bad conduct, commission should be clawed back when a policy lapses early.[45] Distributors would earn more for keeping customers well served, and less for selling policies that customers soon drop. If insurers apply the same outcome measures to all distributors, competition would turn on the quality of service.

Question 21 – Compliance to commission structure has to be at the insurer and distributor level. Proper and timely reconciliation of commissions is necessary so that the “commission paid and commission received” are identical amounts. How can various regulated entities be made more responsible and compliant?

Large distributors would have to publish their commission terms with each insurer.[46] Where caps give insurers a common reference point, publishing detailed terms may let insurers see and match each other’s terms, which may reduce competition among them.

Commission records for each policy should be held by a neutral body, such as the Insurance Information Bureau or the PIR, and shared with the regulator.[47] The commission on each policy should be disclosed to the customer, rather than detailed terms being published across the market. IRDAI could match “commission paid” and “commission received” automatically from these records, which would meet the compliance goal. Customers would still see what they pay, but competitors would not see each other’s terms.

7. Transparency, Bundling and Mis-selling (Sections 9 to 11)

Question 22 – Are the measures proposed for improving transparency adequate? Please suggest additional measures, if required.

We support standard product information, standard measures of insurers’ performance and the ban on dark patterns.[48] Customers generally do not know how much commission is paid on their policy.[49] The paper proposes disclosure on the policy only for commercial policies with cover above ₹50 crore.[50]

The commission on every policy should be disclosed to the customer at the time of sale. Customers would see how much of their premium goes to the distributor, and could compare across channels. Distributors would compete openly on price and service. IRDAI would then not need detailed commission terms to be published across the market, which may help insurers align their terms.[51]

Question 23 – Which are the categories of expenditure or remuneration that should be subjected to cost audit?

The fees of MIIs are meant to recover the cost of running the platform, and to be much lower than current commission rates.[52] The proposed cost audit covers insurers and large IDEs, but not MIIs, which are owned by insurers that compete with independent distributors.[53]

Cost audit should cover all payments by insurers to distributors, in any form, including payments to companies related to distributors.[54] Cost audit should extend to MIIs, with separate accounts. The audit would confirm that MII fees are based on cost, and that the insurers that own them do not subsidise them. Any price advantage of MIIs would then reflect real efficiency.

Question 24 – Are the illustrations of acceptable packaging of insurance with credit or loan appropriate?

We support the curbs on compulsory bundling of insurance with loans. Customers buying insurance with a loan have little chance to compare. NBFCs receive total pay-outs of around 42% of the premium on new life insurance policies they sell.[55] Forcing a customer to buy one product to get another as a condition of purchase, without exercise of free consent and choice known as tying, a recognised harm to competition.

Borrowers should be free to buy the required cover from any insurer or distributor, and lenders should accept any policy that meets objective criteria. Lenders should tell customers this before approving the loan. Borrowers could compare cover when taking a loan, and other distributors could compete for this business. Lenders could not make loan approval, interest rates or processing time dependent on buying insurance through them.[56] Competition on price and service would replace the captive sale.

Question 25 – Are the illustrations of mis-selling appropriate? Please suggest specific measure to disincentivize this.

The examples of mis-selling are broadly appropriate.[57] Mis-selling should be tackled by penalising those who mis-sell, rather than by restricting a whole class of distributors.[58] The paper proposes clawback of commission and a public record of mis-selling.[59] However, it does not say who decides that mis-selling occurred, how the seller is heard, or how a decision can be challenged. If the insurer decides, it would be adjudicating a matter in which it has a financial interest. The conflict of interest may have a taint of bias.

Mis-selling should be decided through an independent process, after notice and a hearing, with a right of appeal, before any clawback is given effect or public record is put in public domain. Sellers who mis-sell would lose their commission and have their record published. Honest sellers would be protected from wrong findings, and customers could rely on the public record.

8. Motor Insurance and Market Infrastructure Institutions (Sections 12 and 13)

Question 26 – Do you agree with the proposed reform?

We support the bar on refusing cashless repair, where the insurer pays the garage directly, to customers who bought insurance elsewhere, and the ban on harmful incentive arrangements with vehicle manufacturers.[60] Dealers must prominently display the MII option, with a QR code, to new-vehicle buyers. There is no similar provision for other licensed platforms.[61] The only alternative to the dealer that is proposed to be promoted at the showroom would be the MII which is clearly inconsistent with the principle of fair competition.

Dealers should therefore, present the MII and other licensed platforms on equal terms, for example through a neutral list of options. A buyer at the showroom would see several options, compare prices and choose. Platforms would compete for motor customers on merit, in line with IRDAI’s aim of giving new-vehicle buyers an informed choice.[62]

Question 27 – It is expected that insurers will offer products at lower rates on MII platforms such as Bima Sugam in view of the lower distribution cost. In this context, is it desirable and practical to introduce a mandatory mechanism of offering the MII option to purchasers of new vehicles along with the option of opt-out?

We do not consider a mandatory MII offer desirable. A compulsory option at the time of sale would steer customers to one platform, without that platform having to compete on price or service. Together with preferred status and promotion by dealers, it could amount to favouring, by regulation, a platform owned by insurers who compete with independent distributors.[63] Preferential treatment creates uneven playground and thereby chills the competition amongst the insurers.

Instead, dealers should present all licensed options, including MIIs, with comparable price information, and each insurer should set its prices for each channel independently. A buyer could still choose the MII if it is cheaper, but it would win business on price and service, not by default. Independent pricing would prevent insurers from jointly favouring their own platform, in line with IRDAI’s own concern about practices that restrict price competition across channels.[64]

Question 28 – Do you agree with the role of MII as a systemic intervention for recalibrating economics of insurance distribution? Please suggest the nature of services you would like to be available on this platform.

We support MIIs as neutral shared infrastructure, much like UPI, the payments system that all banks and apps can use, but not as preferred distributors. At least 11 insurers must form an MII, and each hold less than 10% once it is fully running.[65] Competing insurers would therefore jointly decide fees, listings and rankings. The level playing field described for MIIs covers insurers and consumers, but not other distributors.[66]

MIIs should have independent management, published rules for listing and ranking products, and safeguards against insurers sharing sensitive information. They should be open to all licensed distributors on equal terms. As with UPI, any licensed distributor could connect to the MII and offer customers the same products and data, competing on service. Useful services include a central record of policies, standard product and claims data, and claims tracking. Each insurer and the Federation need to take on board the professional services of an antitrust lawyer to ensure that the Federation platform is not used for coordination amongst competitors and they would not indulge in any conduct including exchange of competitive sensitive information which undermines competition.

9. Education, Objectives, Outcomes and Other Aspects (Sections 15 and 16)

Question 29 – Please suggest nature of activities which can be taken by the PEPF in a cost-effective manner to complement the distribution reforms.

IRDAI finds that customers cannot easily compare insurance products.[67] Many also may not know their rights, such as porting or cancelling a new policy.

The Policyholder Education and Protection Fund (PEPF) should fund simple guidance, in several languages, on comparing policies using the standard information IRDAI proposes.[68] It should also explain customers’ rights, including porting, the free-look period during which a new policy can be cancelled for a refund, and the right to buy insurance separately from a loan. Informed customers would compare and switch more, and insurers and distributors would compete harder on price and service. Messages should be neutral between channels, so that education strengthens competition rather than steering customers to any one platform. Funds need to conduct competition law compliance training programs to make understand and comply with the provisions of the Competition Act, 2002.

Question 30 – Are the proposed measures adequate for meeting the reforms objectives? Does the sector need more or different measures? Please suggest how can these be improved upon.

IRDAI names strengthening competition as a core aim of the reforms.[69] However, the paper does not provide for testing the final regulations for their effect on competition.

While finalising the regulations, IRDAI should refer draft regulations including any other related matter to the CCI under Section 21 of the Competition Act, 2002. Since the 2023 amendment, IRDAI may do so on its own, on any issue relating to the objectives of that Act.[70] The CCI is mandated to give its opinion within 60 days, and IRDAI must then consider it and record its findings with reasons.[71] The regulations would be tested by an expert competition body before taking effect, without undue delay. This would give all stakeholders confidence that the intended aim of infusing and promoting competition at all level is likely to be attained as the expert body on competition dimensions, has reviewed and endorsed the same.  This will also help the regulator in having concurrence of the Parliament as notification issued by IRDAI are required to be laid before the Parliament.

Question 31 – Are the proposed parameters for assessing outcomes and impact of the reform measures appropriate and adequate? Please suggest how can these be improved upon.

The proposed measures of success include useful ones, such as the number of active distributors in smaller cities, towns and rural areas.[72] To know whether the reforms strengthen competition, as intended, IRDAI needs specific measures of competition.

IRDAI should add and regularly publish measures such as how often customers switch policies, the market share of smaller insurers, how concentrated the market is, the share of business through MIIs compared with other platforms, and premium trends by product. These figures would show early where competition is weakening, for example if business shifts towards one platform, or if lower costs do not reach customers as lower premiums. IRDAI could then adjust the relevant measures. Migration of policy from one insurer to another should not involve cost and the process ought not be burdensome.

Question 32 – Are there any other aspects that need to be considered for distribution reforms and their effective implementation?

The Consultation Paper sets out a broad programme of reform, and IRDAI names strengthening competition as one of its core aims.[73] Empirical evidence suggest that competition in markets reduces price, boosts choice, encourages innovation, improves quantity, punishes the laggards and if wish to enhance the reach, make available insurance cover at an affordable price of acceptable quality, we need to infuse and promote competition in the insurance markets.  Whether the reforms achieve that aim will depend on how they are designed and put into practice. We suggest that IRDAI consider five further points before it issues the final regulations.

(a) Same activity, same treatment

Several proposals treat distributors differently for the same work. On health insurance bought by individuals, an IDE may earn up to 15% of the premium in the first year and 5% on renewal, while an agent may earn up to 20% and 10%.[74] On own-damage cover for a new vehicle, a dealer set up as a company may earn up to 5%, while a dealer owned by one person and tied to one insurer may earn up to 10%.[75] This sits uneasily with the legal position of distributors. An agent is appointed by, and acts for, the insurer, while IRDAI notes that a broker owes a fiduciary duty to the customer.[76]

The regulator should remain neutral between channels, such as agents, brokers, banks and online platforms. Whatever rules it adopts, distributors doing the same work should be treated alike. IRDAI has itself adopted the principle of “same activity, same regulation”.[77] Customers, not regulation, would decide which channels succeed. Distributors would compete on service and advice, and no channel would gain an advantage simply from its legal form. We made the same point in an earlier article: all channels, including Bima Sugam, deserve a level playing field.[78]

(b) Neutral market infrastructure

The paper proposes that MIIs may receive preferred distribution status. It expects insurers to offer lower prices on MII platforms, while other distributors may not insist on the same price across channels. Vehicle dealers must also display the MII option prominently, with a QR code.[79] The level playing field described for MIIs covers insurers and consumers, but not other distributors.[80] Since competing insurers jointly own and run MIIs, there is also a risk that they coordinate on fees, prices or rankings.[81]

MIIs should be neutral shared infrastructure, much like UPI in payments, with no preferred status. They should have independent management, published rules for listing and ranking products, and safeguards against insurers sharing sensitive information. Their fees should be based on cost and audited. Any licensed distributor could connect to an MII on equal terms, and customers would see the same products wherever they shop. An MII would win business on price and service, not through regulatory advantage, and its owners could not use it to coordinate.

(c) Data access and confidentiality

The systems for checking customers’ identity, and the identity system for all individual sellers, may run through an MII. Vehicle dealers must also share new-vehicle buyers’ mobile numbers with the PIR.[82] A platform that competes with independent distributors could then see their customers, sales and sales staff.

IRDAI’s description of the PIR as open to all, with a level playing field for insurers and intermediaries, should be written into the regulations.[83] Data collected to check identity or for the PIR should be used only for those purposes, consistent with the duty of confidentiality in Section 14C of the Insurance Act, 1938.[84] All intermediaries would have equal access to shared systems, and no platform could use regulatory data to target a rival’s customers. Customers’ information would be protected, and competition would turn on service, not on access to data.

(d) Fair process in cases of mis-selling

The paper proposes clawback of commission and a public record of mis-selling.[85] However, it does not say who decides that mis-selling occurred, whether the seller is heard first, or how a decision can be challenged. If the insurer decides, it would be deciding a matter in which it has a financial interest, and insurers also compete with independent distributors.

Mis-selling should be decided through an independent process, after notice and a hearing, with a right of appeal, before any clawback or public record. Those who mis-sell would be penalised, while honest sellers and channels would be protected from wrong findings. This would respect natural justice and fair competition, and make the public record reliable for customers.

(e) Testing, transition and review

IRDAI introduces the expense limits for insurers over five years, but sets out no gradual path for the changes to how distributors are paid.[86] The paper also does not provide for testing the final regulations for their effect on competition.

IRDAI should refer the final proposals to the CCI under Section 21 of the Competition Act, 2002, introduce changes to distributors’ pay in stages, and review the reforms after a fixed period using published data. It should also publish how it considered the main comments received, in line with the aim of transparency in making regulations under the Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Act, 2025.[87] The CCI must give its opinion within 60 days, and IRDAI must record its findings with reasons.[88] A staged transition would give distributors time to adjust, as Australia did over three years for life risk insurance commissions.[89] Regular review would allow IRDAI to correct measures that harm competition or coverage.

A sectoral regulator exists to secure the best outcomes for the sector as a whole, namely policyholders, intermediaries and insurers, including those that may enter the market in future. Its task is the healthy growth of the market, not the comfort of firms already in it.[90] This also reflects the Preamble of the Competition Act, which seeks to promote and sustain competition and ensure freedom of trade, and the principle of competitive neutrality in the Draft National Competition Policy, 2011.[91] The reforms will best serve the goal of wider insurance coverage if they follow a simple principle: same activity, same treatment, for every distributor and every platform.

[1] IRDAI, Consultation Paper on Recalibrating Economics of Insurance Distribution – Part 1: Distribution Reforms and Part 2: Distribution Costs & Commission Structure (September 2026) (“Consultation Paper”), Part 1, paras 24 and 34, pp. 14 and 18.

[2] Consultation Paper, Part 1, para 45, p. 20.

[3] Consultation Paper, Part 1, para 55, p. 22.

[4] Consultation Paper, Part 2, Annexure 2, para 1, p. 20.

[5] Consultation Paper, Part 1, Graph 5, p. 21.

[6] Consultation Paper, Part 1, para 84, pp. 29–31.

[7] Consultation Paper, Part 1, para 91 (Principle 1), p. 34.

[8] Ministry of Corporate Affairs, Draft National Competition Policy, 2011.

[9] Consultation Paper, Part 1, para 23, p. 14.

[10] Consultation Paper, Part 1, para 95(7)–(8), p. 44; paras 105, 107 and 112, p. 53.

[11] Consultation Paper, Part 1, Box 4A(B), p. 49.

[12] Section 42(1), Insurance Act, 1938; Consultation Paper, Part 1, para 86(c), p. 32.

[13] Consultation Paper, Part 1, paras 67–68, p. 25.

[14] Consultation Paper, Part 1, paras 35–36, pp. 18–19.

[15] Consultation Paper, Part 1, para 102 (Principle 5), p. 47; Box 4A, note, p. 50.

[16] Consultation Paper, Part 1, para 91 (Principle 2), p. 34.

[17] Consultation Paper, Part 1, para 102 (Principles 1–2), p. 47.

[18] Consultation Paper, Part 1, para 86(c), p. 32.

[19] Consultation Paper, Part 1, para 92(6), p. 38.

[20] Consultation Paper, Part 1, para 22 (Objective 2), p. 8.

[21] Consultation Paper, Part 1, para 92(7), p. 38.

[22] Consultation Paper, Part 1, para 131, p. 58; Digital Personal Data Protection Act, 2023; Section 14C, Insurance Act, 1938.

[23] Consultation Paper, Part 1, para 137, p. 60.

[24] Consultation Paper, Part 1, para 92(8), pp. 38–39.

[25] Consultation Paper, Part 1, para 92(3), p. 37.

[26] Consultation Paper, Part 1, para 125, p. 57; para 139, p. 64.

[27] Consultation Paper, Part 1, para 92(3), p. 37.

[28] Consultation Paper, Part 2, para 8.2, p. 11.

[29] Consultation Paper, Part 1, para 68, p. 25; para 84 (Objective 10), p. 31.

[30] Consultation Paper, Part 1, para 26, p. 15.

[31] Consultation Paper, Part 1, para 25, p. 14.

[32] Consultation Paper, Part 1, Box 2, p. 43.

[33] Consultation Paper, Part 1, Boxes 4A–4B, pp. 49–52.

[34] ASIC Corporations (Life Insurance Commissions) Instrument 2017/510 (Australia), sections 5 and 7.

[35] Consultation Paper, Part 1, paras 67–68, p. 25.

[36] Consultation Paper, Part 1, para 102 (Principles 1–2), p. 47.

[37] Consultation Paper, Part 1, para 130, p. 57; para 137, p. 60; para 140, p. 64.

[38] Competition and Markets Authority (UK), Digital Comparison Tools Market Study: Final Report (26 September 2017), para 2 and Table 4.1.

[39] Consultation Paper, Part 1, para 102 (Principles 1–2), p. 47.

[40] Consultation Paper, Part 1, para 66, p. 25.

[41] Consultation Paper, Part 1, para 92(9)(A), p. 39.

[42] Consultation Paper, Part 1, Box 4A(A), p. 49; para 142(2)–(3), p. 67.

[43] Consultation Paper, Part 1, para 46, p. 20.

[44] Consultation Paper, Part 1, para 123, p. 56.

[45] Consultation Paper, Part 1, para 130, p. 57.

[46] Consultation Paper, Part 1, para 107, p. 53.

[47] Consultation Paper, Part 1, para 110, p. 53.

[48] Consultation Paper, Part 1, paras 118–122, pp. 55–56.

[49] Consultation Paper, Part 1, para 86(c), p. 32.

[50] Consultation Paper, Part 1, para 109, p. 53.

[51] Consultation Paper, Part 1, paras 106–107, p. 53.

[52] Consultation Paper, Part 1, para 142(1), p. 66; para 147, p. 68.

[53] Consultation Paper, Part 1, para 105, p. 53; para 144, p. 68.

[54] Consultation Paper, Part 1, para 102 (Principle 12), p. 48; para 113, pp. 53–54.

[55] Consultation Paper, Part 1, para 45, p. 20.

[56] Consultation Paper, Part 1, para 131, p. 58.

[57] Consultation Paper, Part 1, Box 5, pp. 61–63.

[58] G.R. Bhatia and Ravi Prakash, “Insurance Distribution Reforms in India: More Choice, Fair Competition, and an Indispensable Intermediary for Achieving ‘Insurance for All by 2047’”, Mondaq (6 July 2026).

[59] Consultation Paper, Part 1, paras 139–140, p. 64.

[60] Consultation Paper, Part 1, para 142(6), p. 67.

[61] Consultation Paper, Part 1, para 142(5), p. 67.

[62] Consultation Paper, Part 1, para 142(4), p. 67.

[63] Consultation Paper, Part 1, para 142(5), p. 67; paras 144 and 147, p. 68.

[64] Consultation Paper, Part 1, Box 6, p. 66.

[65] Consultation Paper, Part 1, para 146, p. 68.

[66] Consultation Paper, Part 1, para 92(1)(C), p. 36.

[67] Consultation Paper, Part 1, para 67, p. 25.

[68] Consultation Paper, Part 1, paras 119–121, pp. 55–56.

[69] Consultation Paper, Part 1, para 8, p. 5; para 82, p. 28.

[70] Section 21(1), proviso, Competition Act, 2002, as amended by the Competition (Amendment) Act, 2023.

[71] Section 21(2), Competition Act, 2002.

[72] Consultation Paper, Part 1, para 22 (Objective 2), p. 8; para 158, p. 72.

[73] Consultation Paper, Part 1, para 8, p. 5; para 82, p. 28.

[74] Consultation Paper, Part 1, Box 4A(B), p. 49.

[75] Consultation Paper, Part 1, Box 4A(A), p. 49; para 142(2)–(3), p. 67.

[76] Section 42(1), Insurance Act, 1938; Consultation Paper, Part 1, para 86(c), p. 32.

[77] Consultation Paper, Part 1, paras 64–66, p. 25.

[78] G.R. Bhatia and Ravi Prakash, “Insurance Distribution Reforms in India: More Choice, Fair Competition, and an Indispensable Intermediary for Achieving ‘Insurance for All by 2047’”, Mondaq (6 July 2026).

[79] Consultation Paper, Part 1, para 147, p. 68; para 160 (Question 27), p. 75; para 92(9)(A), p. 39; para 142(5), p. 67.

[80] Consultation Paper, Part 1, para 92(1)(C), p. 36.

[81] Consultation Paper, Part 1, paras 144 and 146, p. 68.

[82] Consultation Paper, Part 1, para 92(3), p. 37; para 124(a), p. 56; para 142(5)(c), p. 67.

[83] Consultation Paper, Part 1, paras 150–151, p. 69.

[84] Section 14C, Insurance Act, 1938.

[85] Consultation Paper, Part 1, paras 139–140, p. 64.

[86] Consultation Paper, Part 1, Box 2, p. 43; Boxes 4A–4B, pp. 49–52.

[87] Consultation Paper, Part 1, para 23, p. 14.

[88] Sections 21(1)–(2), Competition Act, 2002, as amended by the Competition (Amendment) Act, 2023.

[89] ASIC Corporations (Life Insurance Commissions) Instrument 2017/510 (Australia), sections 5 and 7.

[90] On the risk of regulatory capture generally, see G.J. Stigler, “The Theory of Economic Regulation”, Bell Journal of Economics and Management Science, Vol. 2(1), 1971, pp. 3–21; E. Dal Bó, “Regulatory Capture: A Review”, Oxford Review of Economic Policy, Vol. 22(2), 2006, pp. 203–225.

[91] Preamble, Competition Act, 2002; Ministry of Corporate Affairs, Draft National Competition Policy, 2011.