IRDAI’s proposed commission caps could squeeze dealer-led insurance sales from FY28
Proposed IRDAI caps on insurance commissions may cut distributor earnings by 50–66% across some products, affecting auto dealers, OEM-linked brokers, PoSP networks and digital sellers. Lower payouts are not assured to translate into lower policy premiums.
What happened
IRDAI’s proposed insurance commission caps could sharply reduce income for automobile dealers, OEM-linked brokers and other distributors. The framework may
Key facts
- Motor third-party insurance commission cap: nil for IDEs; 2.5% for agents/associates
- Motor own-damage/personal accident/legal-liability cap: 5% for IDEs; 10% for agents/associates
- Individual health first-time commission cap: 15% for IDEs; 20% for agents/associates
- Health renewal cap: 5% for IDEs; 10% for agents/associates
- Non-linked life first-year cap: 20% for IDEs; 25% for agents/associates
- Life renewal cap: 3% for IDEs; 5% for agents/associates
- Potential commission cuts: 50-66% across products from FY28
Why this matters
Prioritize partnerships or acquisitions that add fee-based servicing, embedded-insurance technology or owned customer channels to offset reduced commission economics.