๐๐๐๐๐ ๐ซ๐๐ญ๐ฎ๐ซ๐ง๐ฌ ๐ญ๐จ ๐ข๐ญ๐ฌ ๐๐ข๐ซ๐ฌ๐ญ ๐๐ฎ๐ญ๐ฒ
That is the title of our piece in today’s Financial Express (India), co-authored with Dr. M. S. Sahoo, on IRDAI’s consultation paper “Recalibrating Economics of Insurance Distribution”.
The Insurance Regulatory and Development Authority of India Act, 1999 opens with its purpose: to protect the interests of holders of insurance policies, and only then to regulate and promote the industry. The Sabka Bima Sabki Raksha Act, 2025 reinforced this, empowering IRDAI to cap commissions “in the interest of the policyholders”. The consultation paper puts that mandate to work.
IRDAI’s own data tell the story. In a single year, life insurers paid more on surrenders (โน2.33 trillion) than on maturities (โน2.23 trillion). Only 48% of life policies survive 5 years, against 71% of those bought online. Between FY23 and FY25, distributor remuneration through life insurance corporate agents grew 125%, while new business premium grew 28%. Broker commissions grew 173% against premium growth of 37%.
What stands out is candour. IRDAI has acknowledged that the 2023 experiment has not delivered, made the analysis public, and attached outcome parameters to its objectives.
๐๐ก๐๐ญ ๐ข๐ฌ ๐๐๐๐จ๐ฎ๐ง๐ญ๐๐๐ฅ๐ ๐ซ๐๐ ๐ฎ๐ฅ๐๐ญ๐ข๐จ๐ง.
We support the direction and suggest four refinements:
(1) Savings must reach policyholders, through lower premiums and better surrender values. Premia for direct buyers should be correspondingly lower, similar to the direct plan for mutual funds.
(2) Reward persistence, not merely the sale, by deferring part of first-year commission.
(3) Treat caps as a bridge to disclosure, on the lines of the NPS.
(4) Sequence the reforms with Bima Sugam and the Public Insurance Registry, and keep the framework stable.
Comments close on October 25.
๐๐ก๐ ๐ ๐จ๐๐ฅ ๐ข๐ฌ ๐ ๐ฆ๐๐ซ๐ค๐๐ญ ๐ฐ๐ก๐๐ซ๐ ๐ข๐ง๐ฌ๐ฎ๐ซ๐๐ง๐๐ ๐ข๐ฌ ๐๐จ๐ฎ๐ ๐ก๐ญ, ๐ง๐จ๐ญ ๐ฆ๐๐ซ๐๐ฅ๐ฒ ๐ฌ๐จ๐ฅ๐.
Full piece: https://lnkd.in/dkxKtbDi
Indian Ministry of Finance Insurance Regulatory and Development Authority of India Securities and Exchange Board of India (SEBI) Regstreet Law Advisors