Consultation paper · 23 September 2026 · the grids are in Part 1
IRDAI has published Recalibrating Economics of Insurance Distribution — a consultation paper that proposes to return hard commission limits, tighten the expense envelope, bring every form of distributor reward inside the definition of commission, and rebuild the intermediary taxonomy. Not one cap. Four changes, stacked.
Comments close 25 October 2026. Responding credibly means quantifying the effect on your own book first — by product, channel, premium term and vintage.
Four separate things are often reported as one. They are at very different stages.
The Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Act 2025 re-empowered IRDAI to specify commission and reward limits, reversing the 2023 liberalisation. Settled law, not a proposal.
The IRDAI (Insurance Intermediaries) (Amendment) Regulations 2026, IRDAI/Reg/8/222/2026. An intermediary earning more than ₹10 crore a year in commission must disclose that commission, related-party transactions, profits and dividends. IRDAI has said the form and manner will be specified separately.
The consultation paper is out and the rate grids sit in Boxes 4A and 4B of Part 1. This is the window in which the numbers can still be argued. After it closes, they are argued for you.
A consultation paper is a proposal. Percentages move between draft and final: a February 2026 draft that would have restricted banks to a one-time referral fee did not survive into the June directions. Plan against the direction, not against a number.
Life expenses of management move to a company-level 15% of GDPI within two years and 12.5% within five. General insurers go from 30% of gross written premium to 20% of domestic GDPI — a rate cut and a narrower base at once. Standalone health moves 35% to 30%.
Hard limits come back underneath the envelope, varying by segment, line of business, channel, product complexity and the effort to sell and service. Explicitly not a uniform approach.
All remuneration, direct or indirect, monetary or non-monetary, comes inside the regulatory definition. Contests, trips, co-marketing, dealer and OEM support, training subsidies and payments through group entities all land inside a capped, cost-audited, published number.
Brokers, corporate agents, web aggregators, IMFs and POSPs collapse into distribution entities, distribution persons and market infrastructure institutions, with a sharper line between open and closed architecture. Rates attach to the new class.
Non-linked and linked, by premium paying term. Distribution entity first, agent second.
| Premium paying term | Entity, first year | Agent, first year | Entity renewal | Agent renewal |
|---|---|---|---|---|
| Below 5 years | 5% | 6.25% | 2% | 5% |
| 5 years | 10% | 12.5% | 2% | 5% |
| 6–8 years | 14% | 17.5% | 3% | 5% |
| 9 years | 18% | 22.5% | 3% | 5% |
| 10 years and above | 20% | 25% | 3% | 5% |
From the start of the sixth policy year, renewal commission rises 0.5 percentage points every three years, capped at 7% — reached around policy year 27 for an entity and year 15 for an agent. The reward moves from selling a long policy to the policy still being there.
Every percentage on this page comes from published reporting of Boxes 4A and 4B, not from the paper itself. Three independent renderings agree and the arithmetic is self-consistent — but verify against Part 1 before quoting a rate externally.
Work out what determines the maximum commission on a single policy under this framework, and you get eight inputs — not one.
Term, savings, annuity and group each carry a different ceiling. Annuity gets half a point; NPS annuity gets nothing at all.
Single and multi-year premium are capped separately — 1% against 20% on individual savings.
Five bands, each with its own first-year limit, from 5% up to 20%.
Entity or agent — a fixed 1.25 times gap in year one, widening to as much as 2.5 times on renewal.
The trail steps every three years from the sixth policy year. This input advances annually on every policy already written.
Under-served business multiplies the applicable first-year cap by 1.1 or 1.2 — a multiplier, not added points.
Sold alongside a loan, the same product drops to a separate and much lower grid.
Group single premium carries a rupee cap — ₹20 lakh or ₹30 lakh — running beside the percentage. Both bind.
Compliance stops being a number you check and becomes a property of the engine that computes the payout — proved, line by line, to a cost auditor whose findings are published.
The four-week readiness review establishes whether a scheme change can be modelled and deployed at your scale today. One channel, your own payout data, at our cost — and the output is exactly what a credible consultation response needs.