Stories
IRDAI Reforms Need Phased Rollout, Not One-Size-Fits-All: Industry CEOs Urge Regulator
- •Leading Indian insurers broadly welcome IRDAI's proposed distribution rule overhaul but advocate for phased implementation to minimize disruption.
- •Industry executives, including MD & CEOs from SBI Life, Bharti Life, and HDFC Ergo, believe reforms can enhance transparency and affordability, creating a customer-centric model.
- •The IRDAI consultation paper proposes commission caps, tighter expense limits, and increased transparency, replacing the 2023 framework that lacked cost discipline.
- •Bharti Life's Parag Raja suggests a graded Expense of Management (EOM) structure based on insurer size, similar to mutual funds, to provide flexibility for smaller players.
- •SBI Life's Amit Jhingran notes the return of commission caps was necessary as the 2023 framework did not yield positive industry response, while HDFC Ergo's Parthanil Ghosh anticipates significant operational adjustments for compliance.
Key Questions Answered
The IRDAI consultation paper proposes hard commission caps, tighter expense of management (EOM) limits, and greater transparency and accountability in insurance distribution, replacing the flexibility introduced in 2023.
Industry executives urged a phased implementation or glide path—such as a graded EOM structure based on company size—to minimise market disruption, help smaller insurers absorb fixed costs, and allow companies to adjust 30-40% of their operational processes.
SBI Life MD and CEO Amit Jhingran noted that the return of commission caps was necessary because the industry did not respond positively to the 2023 framework. He added that SBI Life's commission structure is already broadly aligned with the proposed rules, resulting in limited operational disruption.
