Reforming Insurance Distribution: Key Proposals Under IRDAI’s Consultation Paper

Introduction

On 23 September 2026, the IRDAI proposed major changes for the insurance distribution landscape through its Consultation Paper on “Recalibrating Economics of Insurance Distribution” (“Paper”). The Paper is set out in two parts, where Part 1 titled “Distribution Reforms” proposes changes to address the structural issues identified by IRDAI, and Part 2 titled “Distribution Costs and Commission Structures” builds on the issues identified in Part 1 by undertaking a detailed examination of the distribution costs and commission structure across the industry.

The Paper proposes, among other matters, revisions to the Expenses of Management (“EoM”) framework, simplification of the insurance distribution architecture, re-introduction of prescribed commission caps, greater transparency in pricing and distribution, safeguards against compulsory bundling and mis-selling, and reforms to motor insurance distribution. The Paper also proposes the development of digital infrastructure