IRDAI Caps Commissions: Does Your Premium Drop?

IRDAI wants to cap or eliminate commissions on insurance products, especially mandatory ones. This could reshape how you buy insurance — lower costs for some, but fewer advisors willing to sell you the right cover.

Here's what happened: IRDAI released a consultation paper proposing product-level commission caps for insurance distributors, with mandatory products potentially earning nil or very low commissions.. Digital insurance intermediaries (insurtechs and brokers) that earn 20–35% of first-year premiums on life and health policies face major revenue model disruption under the proposed norms.. The regulator also proposes tighter overall expense-of-management limits, squeezing both the insurer and the distributor side of the cost equation simultaneously..

What you should do: Compare your existing health and term policies directly on IRDAI's Bima Sugam portal to check if you are paying inflated premiums that include high distributor loads.. Check your policy's commission disclosure — since 2023, insurers must disclose the commission percentage paid; request this document from your insurer or agent in writing.. Avoid letting your existing cover lapse during this regulatory transition — under-insurance risk rises when fewer agents actively service policies; set an auto-renewal reminder today..

On unit-linked insurance plans (ULIPs), the premium allocation charge — where most commission hides — must be disclosed in the benefit illustration. A lower charge in Year 1 means more of your money is actually invested.

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