Buying Insurance in India Could Change: IRDAI’s October 31 Deadline Puts Customers in Focus

IRDAI Extends Insurance Reform Feedback Deadline

People buying life, health and general insurance may see changes in how policies are sold and distributed if the latest regulatory proposals are adopted. The Insurance Regulatory and Development Authority of India (IRDAI) has extended the deadline for public and industry feedback on its insurance distribution reforms from October 25 to October 31, 2026. The regulator received more than 650 comments after releasing its consultation paper on September 23. The proposals aim to improve efficiency, reduce excessive distribution costs and strengthen value for policyholders. As of October 30, these are proposals under consultation, not final regulations.

Commission Caps and Lower Distribution Costs

One of the major proposals concerns commissions paid to insurance agents, brokers and other distributors. IRDAI wants a more structured system in which remuneration can reflect the type of insurance product, its complexity, the distribution channel and the effort required to advise customers. It has also proposed a phased reduction in insurers' overall expense limits over five years. The intended outcome is better cost discipline and more value for customers. However, lower commissions do not automatically guarantee cheaper premiums; the actual effect will depend on how insurers and distributors respond.

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Stronger Protection Against Mis-Selling

The consultation also focuses on sales practices that can leave customers with unsuitable policies. Proposed safeguards include stronger action against mis-selling, possible recovery of commissions in confirmed cases and restrictions on incentives linked to insurance sales volumes for certain bank and financial institution employees. The regulator has also raised concerns about insurance being bundled with loans without meaningful customer choice. These proposals could make it easier for buyers to understand what they are purchasing and reduce pressure-driven sales if implemented effectively.

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What Insurance Buyers Should Do Now

Customers should not postpone essential insurance purchases while waiting for a regulatory decision. Instead, compare policy benefits, exclusions, waiting periods, claim conditions, renewal terms and the total premium across insurers. Ask whether a policy is optional when it is offered alongside a loan or another financial product. Check the insurer's claim process and read the policy wording before paying. IRDAI has not finalised the proposed reforms, so buyers should treat future premium reductions or commission changes as uncertain. The key opportunity is stronger transparency and informed choice, not a guaranteed insurance discount. 

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