Recalibrating Insurance Distribution

A Balanced Path to Insurance for All by 2047

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

CORE PROPOSITION

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.

Executive Summary

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.

THE CENTRAL QUESTION

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?

What IRDAI Has Proposed

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 Scale of India's Insurance Economy

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.

Life Premium ₹24.99 Lakh Cr · 3-Year Total
Life Benefits Paid ₹17.03 Lakh Cr · 3-Year Total
Non-Life Premium ₹8.55 Lakh Cr · 3-Year Total
Non-Life Net Incurred Claims ₹5.10 Lakh Cr · 3-Year Total

Distribution Economics: Commission and Human Network

Over three years, reported life + non-life commission/remuneration was about Rs 2.62 lakh crore.

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WHY THIS MATTERS

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.

Insurance for All by 2047: The Last Mile Matters

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.

Lower Commission Does Not Automatically Mean Lower Premium

POLICYHOLDER PREMIUM
Before ₹100
→
After ₹100

No automatic saving

INTERMEDIARY REMUNERATION
Before ₹20
→
After ₹15

₹5 reduction

NSV Recommendations for a Balanced Reform

01

Policyholder Value Pass-Through Statement

Annual disclosure of commission/EoM savings and how they translated into pricing, benefits or service.

02

Separate Acquisition and Servicing Economics

Recognise renewal, continuing service and claims-support functions separately where appropriate.

03

Distribution Livelihood Impact Assessment

Track agent attrition, broker employment, PoSP viability and low-ticket distribution economics.

04

Claims-Support Impact Assessment

Measure claim experience where intermediaries provide active assistance.

05

Function-Based Remuneration

Differentiate by actual advisory, selling and servicing effort rather than category alone.

06

Direct Action Against Mis-Selling

Use suitability, recorded consent, audit trails, complaint analytics and targeted enforcement.

NSV POLICY PERSPECTIVE

Sustainable Distribution. Measurable Policyholder Value.

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.”

Need policy, regulatory or strategic advisory support? Connect with NSV.