The Insurance Regulatory and Development Authority of India (IRDAI) is proposing changes to insurance distribution rules that could reshape how commissions and distribution costs are managed across the industry.

The proposed reforms seek to move away from a uniform commission framework and place greater focus on the cost of distributing and servicing different insurance products. The impact could vary depending on the product, distribution channel and expenses involved in serving customers.

For insurers and intermediaries such as brokers, changes to commission structures could alter the economics of selling certain policies. Low-ticket insurance products could face greater pressure if lower commissions make traditional distribution models less attractive.

The changes could also encourage insurers and intermediaries to expand digital distribution, particularly for products where conventional sales channels become more expensive relative to the value of the policy.

For customers, greater disclosure of distribution-related costs could provide more visibility into how insurance products are sold and the expenses associated with their distribution.

The proposed framework therefore has implications across the insurance ecosystem, from insurers and brokers to policyholders, as the regulator seeks to bring greater transparency and manage distribution costs.