An NSV Policy Perspective on IRDAI's Public Consultation Paper dated 23 September 2026, examining the future of insurance distribution, intermediary remuneration, policyholder value and the need for a balanced and sustainable reform framework.
Recalibrating Economics of Insurance Distribution
If intermediary remuneration is reduced in the name of policyholder interest, the resulting economic benefit should be capable of being identified, measured and demonstrated to the policyholder.
On 23 September 2026, the Insurance Regulatory and Development Authority of India (IRDAI) released a two-part Public Consultation Paper titled “Recalibrating Economics of Insurance Distribution”.
The proposal covers distribution architecture, Expense of Management (EoM), commission/remuneration, market conduct, transparency, digital infrastructure and safeguards against mis-selling.
It is a public consultation proposal—not a final regulation— and comments have been invited through 25 October 2026.
Against this background, Nexus Strategic Ventures Pvt. Ltd. (NSV) presents this Policy Perspective Note as a constructive stakeholder contribution to the consultation process.
NSV supports greater transparency, consumer protection, action against mis-selling, technology-enabled distribution and improved value for policyholders.
If the policyholder continues to pay substantially the same premium while the agent, broker or intermediary receives materially less remuneration, what measurable and immediate economic benefit reaches the policyholder— and where does the saving ultimately go?
| Reform Area | Direction in Consultation Paper | NSV Policy Lens |
|---|---|---|
| Distribution Architecture | Simplification and consolidation of distribution categories. | Simplification is welcome, but function and service obligations should remain visible. |
| Commission / Remuneration | Product-, channel-, complexity- and effort-linked limits. | Any reduction should be accompanied by measurable policyholder-value disclosure. |
| Expense of Management | Phased lowering of insurer EoM limits. | Insurer-side efficiency should be measured alongside distributor-side compression. |
| Market Conduct | Stronger safeguards against mis-selling and incentive distortion. | Target misconduct directly through suitability, audit trails, accountability and enforcement. |
| Transparency & Digital | Greater disclosure and digital infrastructure. | Technology should complement—not prematurely replace—last-mile human support. |
The following three-year snapshot provides context for the debate. Life “benefits paid” and non-life “net incurred claims” are different accounting measures and should not be treated as directly comparable claims metrics.
Over three years, reported life + non-life commission/remuneration was about Rs 2.62 lakh crore.
The question is not merely whether this expenditure can be reduced, but what economic and servicing value it creates—and whether any reduction is transparently passed through to policyholders.
India's “Insurance for All by 2047” vision aims to expand appropriate life, health and property protection for citizens and suitable risk protection for enterprises.
Reaching first-time policyholders across rural, semi-urban and underserved markets will require both digital infrastructure and a financially sustainable human distribution network.
No automatic saving
₹5 reduction
Annual disclosure of commission/EoM savings and how they translated into pricing, benefits or service.
Recognise renewal, continuing service and claims-support functions separately where appropriate.
Track agent attrition, broker employment, PoSP viability and low-ticket distribution economics.
Measure claim experience where intermediaries provide active assistance.
Differentiate by actual advisory, selling and servicing effort rather than category alone.
Use suitability, recorded consent, audit trails, complaint analytics and targeted enforcement.
India does not need cheaper distribution alone. India needs sustainable distribution that delivers measurable policyholder value.
“If policyholder premiums remain substantially unchanged while intermediary remuneration declines immediately, the system should transparently demonstrate where the economic benefit has gone.”
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