New Delhi, September 24, 2026 (Yes Punjab News)
Shares of insurance companies and insurance-linked businesses fell sharply on Thursday, declining between 10 per cent and 20 per cent, after the Insurance Regulatory and Development Authority of India (IRDAI) proposed new limits on commissions paid on individual life insurance policies.
The proposed distribution reforms seek to reduce the emphasis on upfront sales incentives and encourage distributors to support policyholders in continuing with multi-year premium payment plans.
In its consultation paper, IRDAI said the commission structure should incentivise distribution persons and entities to encourage policyholders to persist with multi-year payment plans rather than focus primarily on securing the first-year payment.
Under the proposed framework, maximum commissions for individual non-linked and linked life insurance policies would vary according to the premium payment term (PPT).
For policies with a PPT of less than five years, the proposed commission ceiling is 5 per cent for distribution entities and 6.25 per cent for agents. For five-year payment terms, the limits would rise to 10 per cent and 12.5 per cent, respectively.
The proposed caps increase to 14 per cent for distribution entities and 17.5 per cent for agents for payment terms of six to eight years. For nine-year terms, the limits would be 18 per cent and 22.5 per cent, while policies with payment terms of 10 years or more would carry proposed caps of 20 per cent and 25 per cent, respectively.
IRDAI has also proposed lower commission limits for single-premium products and products offering tax incentives.
For individual savings policies with a single premium, the first-year commission would be capped at 1 per cent for distribution entities and 2 per cent for agents. Single-premium pure term policies would have proposed caps of 7.5 per cent and 10 per cent, respectively.
The regulator has proposed that commissions be comprehensive and include incentives, awards, reimbursement of selling expenses and non-cash benefits.
For single-premium term policies, the proposed first-year commission could be up to 7.5 per cent for distribution entities and 10 per cent for agents. For multi-year premium term policies, the corresponding limits could be as high as 25 per cent and 30 per cent, respectively.
The proposals are part of IRDAI’s efforts to reshape insurance distribution incentives and place greater emphasis on policy continuation over first-year sales.
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