# IRDAI Commission Cap Consultation Paper 2026, Explained > IRDAI proposes hard caps on insurance commissions, mis-selling refunds and no forced loan bundling. What the 2026 paper means for policyholders. - **Published**: 2026-10-18 - **Modified**: 2026-10-18 - **Category**: health-insurance - **URL**: https://www.tldr.money/articles/health-insurance/irdai-commission-cap-consultation-paper --- This explainer sits under our [health insurance guide](/health-insurance), but it affects [term life](/term-life-insurance) and car insurance too. Here is the **IRDAI commission cap consultation paper of 2026** in plain English: what is proposed, what it could mean for your premium, and how to respond. ## What the IRDAI commission cap consultation paper proposes On 23 September 2026 the Insurance Regulatory and Development Authority of India (IRDAI) published "Recalibrating Economics of Insurance Distribution", an 80-page consultation paper. Its case is simple: since commission limits were removed in 2023, commissions have grown much faster than premiums, and policyholders have paid for it. The paper says private life insurers' expenses fell from 21.3% of premium in FY15 to 16.5% in FY21, then rose back to 20.2% in FY26. Private general insurers went from about 25% in FY19 to 32.1% in FY26. The main proposals: - **Hard commission caps** by product and by channel. Distribution entities include banks, brokers and online platforms; agents are listed separately. - **Lower expense-of-management (EoM) limits.** For general insurers, 25% of premium within two years and 20% within five, with FY2027-28 as year one. For life insurers, 15% in two years and 12.5% in five. - **Mis-selling refunds.** Where mis-selling is established, the customer gets the full premium back and the commission is clawed back from the seller. - **No forced bundling.** Lenders could not make you buy insurance as a condition of a loan. - **A Public Insurance Registry** of policy and claims data, with Bima Sugam as the market infrastructure. See [Bima Sugam explained](/articles/health-insurance/bima-sugam-explained). ## Proposed commission caps ### Health insurance | Policy type | Distribution entities | Agents | |---|---|---| | Individual health, first time | 15% | 20% | | Individual health, renewal | 5% | 10% | | Individual health, ported in | 5% | 10% | | Group health | 2.5% (max INR 100 lakh) | 5% (max INR 100 lakh) | Health policies packaged with a loan would be capped at 5% the first time and 2.5% on renewal. Hospitals that sell policies would be capped at 5% on first-time policies. ### Term life insurance For individual pure term plans with regular premiums, the cap would be 25% of the first-year premium and 7.5% on renewals for distribution entities, and 30% and 10% for agents. The paper's own data shows first-year commissions on pure term plans averaging 51%, with a maximum of 81%. Single-premium term would be capped at 7.5% (entities) and 10% (agents). ### Motor insurance | Cover | Distribution entities | Agents | |---|---|---| | Third party, new vehicle | Nil | 2.5% | | Third party, old vehicle | 2.5% | 5% | | Own damage, new vehicle | 5% | 10% | | Own damage, old vehicle | 10% | 15% | Third-party cover sold with a vehicle loan would carry no commission. ## Will your premium go down? Not automatically. The paper is about how much of your premium goes on distribution and running costs; it does not order insurers to cut prices. Insurance Reporter, citing IRDAI, reported that retail health premiums rose 53% between FY23 and FY25 while commissions rose 118%. Lower costs leave room for cheaper premiums or better claim payouts, but that depends on competition after the rules are final. If your renewal premium has jumped this year, our guide to [health insurance premium increases on renewal](/articles/health-insurance/health-insurance-premium-increase-renewal) has steps you can take now. ## What changes for you as a buyer - **Less pressure to buy the wrong product.** When the first-year commission is a large share of the premium, sellers are pushed to sell new policies, not to service old ones. - **A remedy for mis-selling.** A full refund is stronger than today's typical outcome. - **Freedom at loan time.** If a bank insists on bundled insurance today, ask for it in writing. Under the proposal, compulsory bundling would be banned. Whatever happens, the basics of buying stay the same. Use our [term insurance buying checklist](/articles/term-life-insurance/term-insurance-buying-checklist) before you sign. ## Timeline and how to comment - **23 September 2026:** paper released. - **25 October 2026:** last date for comments, via https://iib.gov.in/dr or drfeedback@iib.gov.in. - **1 January or 1 April 2027:** implementation dates being considered, according to IRDAI chairman Ajay Seth. Insurers have already started responding. Motor insurers have used the feedback window to ask for other changes; see what may change in [third-party vs comprehensive car insurance](/articles/auto-insurance/third-party-vs-comprehensive-car-insurance-india). ## Sources - IRDAI, consultation paper "Recalibrating Economics of Insurance Distribution", 23 Sep 2026 (copy): https://www.caalley.com/exp_drafts/irdai_draft_0923.pdf - BusinessLine, interview with IRDAI chairman Ajay Seth, 11 Oct 2026: https://www.thehindubusinessline.com/economy/focus-on-actual-payouts-not-just-claim-settlement-ratios-irdai-chairman/article71570532.ece - Insurance Reporter, IRDAI to review hospital bills and claim payouts, 16 Oct 2026: https://theinsurancereporter.com/irdai-to-review-hospital-bills-and-claim-payouts/ --- - [More health-insurance articles](https://www.tldr.money/articles/category/health-insurance) - [All articles](https://www.tldr.money/articles)