Insurance stocks tumble as IRDAI proposes overhaul of distribution economics
PB Fintech crashed 32% to Rs 1,285.20. The company operates India's largest online insurance marketplace through its flagship platform, Policybazaar.
Another insurance distributor, Turtlemint Fintech Solutions, slumped 20% to Rs 109.10.
A foreign brokerage said IRDAI's proposed changes pose a risk to PB Fintech and Turtlemint. It estimated that a 10% cut in new-business commission rates could translate into a 10-12% decline in their earnings.
Among insurance companies. HDFC Life Insurance Company fell 5.70%, while The New India Assurance Company declined 5.49%. Niva Bupa Health Insurance Company dropped 3.99%. ICICI Prudential Life Insurance Company declined 3.37%.
General Insurance Corporation of India fell 1.54%. Canara HSBC Life Insurance Company declined 1.52%. Life Insurance Corporation of India slipped 0.98%. Star Health and Allied Insurance Company fell 0.56%.
However, ICICI Lombard General Insurance Company rose 4.98%. Go Digit General Insurance advanced 2.86%. SBI Life Insurance Company gained 0.16%.
IRDAI released its two-part consultation paper, titled Recalibrating Economics of Insurance Distribution, on 23 September 2026.
The regulator has proposed a five-year glide path to lower EoM limits.
For life insurers, the proposed EoM limit would move to 15% of gross direct premium income (GDPI) within two years and 12.5% within five years.
For general insurers, the limit would move to 25% within two years and 20% within five years. The regulator has also proposed shifting the calculation basis from gross written premium to domestic GDPI.
IRDAI has also proposed product- and segment-specific commission limits. The proposed caps would vary based on the insurance segment, line of business, distribution channel, product complexity and the effort required to sell and service the product.
For individual non-linked and linked life insurance products with a premium-payment term of 10 years or more, the proposed first-year commission cap is 20% for distribution entities and 25% for agents.
For policies with a premium-payment term of less than five years, the proposed caps are 5% for distribution entities and 6.25% for agents. These are proposed maximums and not mandatory commission rates.
The regulator has also proposed greater transparency around distributor remuneration. Insurers and large distribution entities would be required to disclose their commission policies and structures in simple and accessible language.
The consultation paper also proposes measures to curb mis-selling. These include stronger suitability requirements and restrictions on certain volume-linked and reward-linked incentives.
IRDAI has proposed changes to the insurance distribution structure. The framework would include Insurance Distribution Entities, Insurance Distribution Persons and Market Infrastructure Institutions.
The regulator has also proposed Bima Sugam and a Public Insurance Registry as digital infrastructure for insurance distribution. The measures are aimed at creating more direct and transparent ways for customers to access insurance products.
The consultation is open for stakeholder comments until 25 October 2026. The proposals are not final regulations and may change following the consultation process.
Powered by Capital Market - Live News