IRDAI Chairman Ajay Seth has said the regulator’s proposed overhaul of the insurance distribution framework is intended to improve efficiency and transparency, not disrupt existing business models or cause job losses.
Mumbai, October 15 — Insurance regulator IRDAI has said its proposed reforms to the insurance distribution framework are not designed to eliminate jobs or disrupt existing businesses, amid concerns raised by industry participants over the impact of the consultation paper.
Speaking at the Samvaad India Open Finance Summit 2026, IRDAI Chairman Ajay Seth said concerns about loss of livelihood were misplaced and stressed that the regulator’s objective is to ensure an orderly transition to a more efficient system.
The consultation paper, released on September 23, proposes recalibrating the economics of insurance distribution by simplifying the existing structure, lowering costs, improving transparency and aligning incentives more closely with policyholder interests.
Industry brokers have warned that the changes could lead to significant revenue pressure and possible job losses, but Seth said the proposals are intended to create new business opportunities within and beyond the insurance sector.
Under the proposed framework, the existing fragmented distribution system would be reorganised into three broad categories: Insurance Distribution Entities, Insurance Distribution Persons and Market Infrastructure Institutions.
The proposals also include simpler registration requirements, lower entry and capital thresholds, reduced regulatory fees and greater flexibility for distributors to undertake insurance as well as other financial and non-financial activities.
IRDAI has also proposed a phased reduction in Expense of Management limits. For life insurers, the limit would be linked to gross direct premium income and reduced to 15% within two years and 12.5% within five years.
For general insurers, the limit is proposed to decline from 30% of gross written premium to 20% of domestic gross direct premium income over five years.
The regulator also plans to recalibrate commission limits based on the line of business, distribution channel, product complexity and the effort involved in selling and servicing policies.
Seth said IRDAI is open to suggestions on the proposed changes, including a phased transition for commission reductions. A second round of consultation is also expected, including draft regulations and an exposure draft.
He also indicated that the earlier January implementation timeline may not be practical because more consultation is required. Comments on the current proposals are open until October 25.
Separately, Seth said foreign investor interest in India’s insurance sector remains strong and reaffirmed that the risk-based capital framework is on track for implementation from April 1, 2027.
