The insurance regulator has proposed wide-ranging reforms covering distribution, commissions, expenses and market conduct. The move aims to improve efficiency, transparency and customer value.
Highlights
- IRDAI has proposed new norms for insurance distribution in India.
- The reforms could mark a shift from volume-led distribution to value-led advisory.
- Proposals cover distribution structure, expenses, commissions, market conduct and transparency.
- Lower expense-management limits and changes in commission rules could reshape insurers’ business models.
New Delhi: The Insurance Regulatory and Development Authority of India (IRDAI) has proposed a comprehensive set of reforms for insurance distribution, potentially bringing significant changes for insurers and intermediaries.
The proposed framework covers insurance distribution, its structure, expenses, commissions, market conduct, transparency and leveraging digital infrastructure. Industry executives believe the changes could push the sector away from a volume-led distribution model towards a more value-led advisory approach.
According to the report, proposals such as lower limits on expenses of management and changes to commission-related norms are expected to alter business and operational dynamics for insurers.
Amit Goel, Director and CEO of Generali Central Life Insurance, said the company is evaluating the proposals to understand their implications for its business and the broader distribution ecosystem. He said there are areas where insurers would seek further clarity as the consultation progresses.
Goel said the proposed framework needs to balance distribution efficiency with the requirement for quality advice, long-term customer servicing and wider insurance penetration.
The reforms could also encourage brokers to move from volume-led distribution towards value-led advisory services. According to Amit Goel, the changes should encourage the industry to focus more closely on acquisition quality, productivity, renewal quality and servicing efficiency.
For insurers and intermediaries, the proposed commission structure and expense-related framework could require adjustments to existing distribution strategies. Companies may also have to reassess how they engage with customers and manage distribution costs.
From the customer’s perspective, greater transparency and accountability could improve suitability and trust in insurance products.
The proposals are currently being evaluated by industry participants, with insurers expected to provide feedback and seek clarity on various provisions during the consultation process.
