India brokers warn reforms will cost jobs and shrink distribution reach

The expense limit may drive insurers to cut sales, servicing, and claims staff, IBAI said.

The Insurance Brokers Association of India (IBAI) said that proposed insurance distribution reforms will harm policyholders, cost jobs, and reduce distribution reach in India.

In a statement on 30 September, IBAI—composed of 98 licensed insurance brokers in the country—decried the over thirty separate commission caps by product and channel, as well as the one-third cut in insurers’ overall expense limit.

IBAI said that jobs will be lost both in the brokers’ side and in insurance companies, tying this to both the commission caps and a proposed expense limit reduction of 30% in a span of five years on the insurers’ side.

“Commission caps where the intermediary earns below the cost of serving these customers will end up reaching these customers, defeating the very objective of this reform,” IBAI said.

For insurers, the expense limit may drive companies to cut sales, servicing, and claims staff, IBAI said.

IBAI said that the paper does not distinguish between insurance sold to a customer and insurance chosen by a customer through an appointed advisor.

“It proposes to pay the customer's own broker less than the insurer's tied agent, a departure from the regulator's consistent position since brokers were introduced in 2002,” IBAI said in the statement.

IBAI also said that the proposals will reduce distribution reach, and is “out of step with global practices,” noting that 18 of the 20 largest non-life markets globally have no commission caps on commercial lines.

The reforms proposed commission caps, released as a consultation paper on 23 September 2026, with general and health insurance caps being steeper than those for life insurance, Nomura’s Global Markets Research team said in a separate report.

IBAI said that it supports other measures in the paper, including the prohibition of compulsory bundling of insurance with loans, the claw back of commission for proven misselling, and identity tagging of salespersons.

IBAI urged the IRDAI to retain the 2023 expense-of-management framework with “tighter computation rules if required.”

It suggested confining the caps to credit-linked and other coerced-choice sales, and to require insurers to refund premium to customers where segments run persistently low claims ratios.

It also said that the IRDAI should “publish a regulatory impact assessment before any regulation is drafted.”