IRDAI updated its regulations for "Payment of Commissions" and general insurer expense management on March 27, 2023. The product-specific capping on the commission paid to intermediaries like agents and brokers has been lifted by IRDAI with the new laws. This action is anticipated to give insurers more control over how they manage their costs and increase insurance penetration in India.
Previously, commission caps varied throughout insurance business lines.According to the new law, the commission must be approved by the insurer's board and must not exceed the permitted amount for management expenses. The total permitted management expense for general insurers is 30% of its gross written premium.
For the end consumer, the above regulations would translate into better pricing and a wider insurance network in the long run.
The revised regulations also allow for additional expense on Insurance Awareness creation and towards InsurTech.
Checkout copy of the regulations on
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