The glide path has ended. What matters now is knowing your expense position before the year-end return is due.
Insurers that exceeded FY23 expense-of-management limits were given until the end of FY26 to come back inside them, on a board-approved glide path. That window has closed. The return for the year now running is certified by your statutory auditor and filed within 45 days of year-end, against a board-approved policy — with no forbearance behind it.
Over eighteen months the consequence of a breach has climbed three rungs, and only the first of them stays inside the annual report.
Eight of 25 life insurers and 15 non-life insurers exceeded EoM limits during the year. The breach appeared in the IRDAI annual report and was managed as a reporting matter.
IRDAI withheld performance-linked variable pay for chief executives at insurers breaching the limits, based on FY25 outcomes and early FY26 trends. Fixed compensation was untouched. The regulations allow this wherever EoM exceeds the board-projected business plan by more than 10%.
Four insurers were barred from opening new branches for six months over their FY25 breaches. Existing operations continue; physical expansion stops.
| Insurer | Reported amount over limit |
|---|---|
| ACKO General Insurance | ₹334.78 cr |
| Niva Bupa Health Insurance | ₹248.37 cr |
| Pramerica Life Insurance | ₹137.79 cr |
| Edelweiss Life Insurance | ₹89.95 cr |
Commission is the largest variable component of expenses of management, and at most insurers it is the component assembled last.
It is calculated in the policy administration system, adjusted in spreadsheets for splits, clawbacks and retrospective scheme changes, reconciled in finance, and only then rolled into a firm-wide expense ratio. Each step is owned by a different function. None of them produces a running total.
Which means the honest answer to “where is our EoM position today?” is usually an estimate — and by the time the certified number exists, the only lever left is to stop paying people. That is a distribution decision made for accounting reasons, in the fourth quarter, which is the worst moment to make it.
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