Stories
IRDAI Draft Norms: Renewal Commissions Offer Certainty Amidst Changes
- •Life insurers view the proposed allowance for renewal commissions under IRDAI draft distribution norms as a source of comfort amidst tighter expense limits.
- •The consultation paper proposes capping commissions to rationalise distribution costs, improve policyholder value and address mis-selling.
- •ICICI Life expects limited disruption from the proposed rules and plans to expand its proprietary channels, whereas HDFC Life anticipates near-term challenges.
- •IRDAI Chairman Ajay Seth stated that the regulator aims to facilitate an orderly transition to the new framework without disrupting existing business models.
Key Questions Answered
The consultation deadline for the IRDAI draft distribution norms is October 25, 2026, while the new framework could be implemented in January or April 2027. IRDAI Chairman Ajay Seth noted that the regulator aims to facilitate an orderly transition to help market participants adjust without disrupting existing business models.
The consultation paper proposes capping first-year commissions on group credit life at 2.5 percent for single-premium policies and renewal commissions at 1 percent. These proposed limits are significantly lower than existing payouts, which have reached up to 14 percent for first-year commissions and up to 38 percent for renewal commissions.
ICICI Life expects limited disruption and plans to expand its proprietary distribution channels like agency networks and digital platforms. Meanwhile, HDFC Life anticipates near-term challenges but remains optimistic that companies adapting to the new environment will emerge stronger.
