Irdai's commission cap move: General insurers get operational flexibility

Mid-to-smaller life companies and standalone health insurers could face near term pressure

The regulator’s move to cap commissions in the insurance sector is expected to provide operational flexibility to companies, especially general insurers, and promote greater discipline in the life insurance sector as the aim is to link commissions rate of intermediaries to the persistency status of the policies sold.

However, if they come into effect, the proposed regulations might impact standalone health insurers and mid-to-small life companies in the near term, but the large companies are unlikely to see any negative impact, analysts said.

The insurance regulator came out with an exposure draft this week, where it proposed to cap commissions paid by