The Insurance Regulatory and Development Authority of India (IRDAI) has put out a set of proposals that could change how insurance policies are sold in India. On September 23, 2026, the regulator released a consultation paper titled “Recalibrating Economics of Insurance Distribution,” covering everything from how much commission an agent can earn to how insurance websites present information online.
These are proposals, not final rules. IRDAI says the proposals are aimed at reducing the cost of insurance distribution and addressing practices that can work against customer interests. IRDAI has invited feedback from insurers, distributors and the public, and the framework could change before anything is formally notified. Still, if you hold an insurance policy or plan to buy one, it’s worth understanding what’s on the table.
What Has IRDAI Proposed?
IRDAI is India’s insurance regulator. It sets the regulatory framework for how insurance companies operate and how insurance products are distributed and sold.
This particular paper is about the business side of insurance, how much insurers spend on running their operations, how much they pay agents and banks to sell policies, and how transparent the whole process is for a customer. IRDAI says it wants to bring down the cost of insurance distribution and reduce practices that can work against customers, such as being sold a policy that doesn’t suit their needs.
These are not final rules yet. This is a consultation paper, a draft that IRDAI shares publicly so that insurers, distributors and ordinary citizens can respond before anything is locked in. At this stage, policyholders should understand that nothing has changed for existing policies, and any final rules could look somewhat different from what’s proposed today.
5 Proposed IRDAI Insurance Changes That Could Affect Policyholders
1. Commission Caps
An insurance commission is the amount an insurer pays to the person or company that sells you the policy; this could be an individual agent, a bank, or an online platform. It’s built into the cost of the product.
IRDAI has flagged a concerning trend: in some segments, commissions have been growing much faster than the actual premiums being collected. In simple terms, distributors have been earning more and more to sell policies, even when the growth in actual insurance sales hasn’t kept pace.
To address this, IRDAI has proposed moving away from a single, uniform commission limit. Instead, commission caps would depend on factors like the type of insurance, how the policy is sold, how complex the product is, and how much service the distributor needs to provide after the sale. The proposal also looks at bringing all forms of payout- commission, rewards, bonuses- under one combined limit, so companies can’t get around the cap by paying extra through a different label.
What this could mean for you: If implemented, the proposed commission structure could change how distributors are paid for selling certain insurance products. IRDAI has not said this will make premiums cheaper; that depends on several other factors, which we’ll come to later.
2. Lower Expense Limits
Every insurance company has running costs, office expenses, salaries, marketing, technology, and payments to agents and distributors. In insurance regulation, this is referred to as “Expenses of Management,” or EoM. IRDAI sets a ceiling on how much of an insurer’s income can go toward these expenses.
IRDAI has proposed bringing this ceiling down over time, in phases, rather than all at once, for both life and general insurers, with the exact limits and calculation basis set out in the consultation paper. (Readers who want the precise percentages and timelines should check IRDAI’s official consultation document, since these figures are still open for feedback and could change.)
What this could mean for you: A lower expense ceiling means insurers would, in theory, have to run more efficiently. IRDAI has said this is intended to eventually reduce the overall cost of insurance. However, this does not automatically mean your premium will fall; a lot depends on how insurers respond, what their claims costs look like, and how competitive the market stays.
3. Mis-Selling and Customer Protection
Mis-selling means being sold an insurance policy that doesn’t actually fit your needs, often without being told important details like what’s excluded from cover, how long you need to keep paying, or whether a cheaper, more suitable option existed. For example, someone walks into a bank for a fixed deposit and walks out having also bought a life insurance policy they didn’t fully understand, sometimes without realising it’s a separate product from their bank savings.
IRDAI has proposed several safeguards here. Distributors may be required to formally document why a particular policy suits a customer’s needs before selling certain life insurance products, and maintain a proper record (an “audit trail”) of that process. There’s also a proposal to publicly disclose information about mis-selling incidents, and to claw back commission from an agent or distributor if mis-selling is later established.
What this could mean for you: If these proposals go through, you could expect more documentation and explanation at the point of sale, and a system that holds distributors more accountable after the fact. This won’t eliminate mis-selling altogether, but it’s aimed at making it harder to get away with and easier to flag.
4. Forced Insurance Bundling With Loans
Bundling, in this context, means being asked or required to buy an insurance policy along with a loan. For example, someone applies for a home loan or personal loan, and the bank makes it seem like taking a specific insurance policy alongside it is compulsory, even though it technically isn’t required by law.
IRDAI has proposed formally prohibiting this kind of compulsory bundling, while still allowing insurance and loan products to be offered together when the customer genuinely chooses to combine them. The paper has also proposed stopping banks and NBFC staff from earning extra incentives tied to how many insurance policies they sell alongside loans, since that kind of incentive can encourage pushy sales.
It’s worth being clear: not all insurance sold alongside a loan is improper. Many borrowers genuinely want cover linked to their loan, for instance, to protect their family from having to repay the loan if something happens to them. The issue IRDAI is targeting is when it’s made to feel mandatory or is sold without proper explanation.
5. Dark Patterns and Online Insurance Sales
“Dark patterns” is a term for design tricks on a website or app that nudge you toward a choice you might not have made if things were presented clearly. In insurance, this could look like an add-on being pre-selected by default, a “no thanks” option made hard to find or click, or a site asking for your phone number and personal details before it will even show you a policy’s price.
The proposal addresses the use of dark patterns in online insurance sales, where website or app design can influence a customer’s decision. IRDAI has proposed that insurers disclose product features, pricing, and quality information in a simple, standard format, without first demanding personal contact details. There’s also a proposal to actively track dark patterns being used across platforms and make that information public.
What this could mean for you: As more people in India buy insurance directly online, this is meant to make comparing and understanding policies easier, without being funnelled into a decision through pressure tactics or hidden defaults.
Will These Changes Make Insurance Cheaper?
There’s no straightforward yes or no here. IRDAI’s stated intent behind lowering expense limits and capping commissions is to reduce the overall cost of running the insurance business, and the regulator has said this could, over time, support more efficient pricing and even expand access to insurance in underserved markets.
But whether your premium actually goes down depends on multiple things: how much insurers are paying out in claims, how competitive the market is, how insurers choose to price their products, and how the final rules differ from today’s proposals. Some industry voices have also flagged concerns that sharply lower commissions could reduce the availability of certain low-premium products or make it harder to sell insurance in smaller towns, since distributors may find it less worthwhile. So, premiums falling is a possibility, not a promise.
What Could Change for Existing Policyholders?
If you already hold an insurance policy, these proposals do not change its terms today. The consultation paper itself does not change the terms, premiums, or benefits of existing policies.
The proposed changes are primarily about how insurers and distributors operate going forward, how much they can earn in commission, how they manage expenses, and how they’re expected to sell policies. If any of this is finalised into regulation, it would mainly shape:
- How new policies are sold and priced after the rules take effect
- How insurers and distributors are required to behave and disclose information
- How mis-selling complaints are handled and acted on
Are These IRDAI Insurance Rules Final?
No, and this is the most important thing to take away. What IRDAI has released is a consultation paper, which is a formal draft shared for public and industry feedback before anything becomes a rule.
IRDAI has invited comments and suggestions on this paper, with the window for feedback open until October 25, 2026. After this consultation period, IRDAI will review the responses it receives, and the final regulations, if and when notified, could differ from what’s currently proposed, in scope, in detail, or in timeline. There’s no confirmed date yet for when, or in what final form, these changes might come into effect.
What Should Policyholders Watch Next?
- Whether IRDAI notifies final regulations after the October 25, 2026 consultation window closes
- Any announced timeline or effective date for implementation
- The final shape of commission and expense limits, once settled
- New customer-protection or disclosure requirements that insurers may be required to follow
- Any changes to how policies are sold, both offline and on digital platforms
This isn’t a reason to buy, switch, or cancel a policy right now; it’s simply worth keeping an eye on as the process moves forward.
Key Takeaway
IRDAI has proposed a wide set of changes aimed at lowering the cost of selling insurance, curbing mis-selling, and making online insurance buying more transparent. These proposals touch commissions, insurer expenses, loan-linked insurance sales, and website practices.
None of this is final; it’s a consultation paper open for feedback until October 25, 2026, and the eventual rules could look different. For now, existing policyholders aren’t directly affected, but the proposals are worth watching as they could shape how insurance is sold and priced in India going forward.
FAQs
What are the new IRDAI insurance rules in 2026?
IRDAI has proposed changes covering insurance commissions, insurer expense limits, mis-selling safeguards, loan-linked insurance bundling, and online sales practices, through a consultation paper released in September 2026.
Are the IRDAI insurance rules 2026 final?
No. They are proposals in a consultation paper. IRDAI is accepting feedback until October 25, 2026, and the final rules could differ from the draft.
What is IRDAI proposing about insurance commissions?
IRDAI has proposed moving away from uniform commission limits to caps based on the type of product, distribution channel, and complexity, along with a combined cap covering all forms of distributor payout.
Will insurance premiums become cheaper?
Not necessarily. IRDAI intends for these changes to eventually lower distribution costs, but actual premiums depend on claims, competition, and how insurers respond — there's no guarantee of lower prices.
What is insurance mis-selling?
Mis-selling happens when a policy is sold to someone without properly explaining its terms, costs, or suitability for their needs, sometimes leaving the buyer with a product that doesn't actually serve them.
ARN Disclosure: Investik Future is an AMFI-registered Mutual Fund Distributor. ARN-341107 — Verify on AMFI ↗. Komal Thakur is the content author and digital marketer; the ARN registration belongs to Investik Future, not to the author personally.
