IRDAI Plans to Cut Life Insurance Commission Cap to 25% From 35%
What Happened
Insurance Regulatory and Development Authority of India (IRDAI) has proposed new commission caps for life insurance distributors, with the maximum first-year payout for long-term policies reduced to 25% from the current 35%. Under the draft rules, commission limits will vary based on the premium payment term, with longer-duration policies eligible for higher first-year commissions. The regulator has also proposed bringing all distributor payments, incentives, and rewards under a unified commission framework.
Key Takeaways
The proposal is aimed at reducing commission-driven selling and encouraging distributors to focus on policy persistency rather than just new sales. If implemented, the move could improve value for policyholders, lower distribution costs, and curb mis-selling across the life insurance industry.