Indian insurers push Irdai for scale-based rules on expense and commission limits

what happened

Insurers in India have asked the regulator Irdai to adopt rules that account for company size. They argue that uniform expense limits could put smaller and newer firms at a disadvantage. The feedback responded to Irdai's 23 September consultation paper on distribution commissions, and the deadline for submissions fell on Saturday, according to Mint.

According to the report, the proposals concern limits on operating expenses and distributor commissions. Larger insurers benefit from scale efficiencies, while smaller ones tend to report higher expense ratios. Industry figures also point to the Reserve Bank of India and SEBI, which already apply similar scale-based approaches to other financial firms and mutual funds.

Commissions would stay the same for all companies, one executive said. Extra flexibility is being requested for other expenses.

why it matters

For investors, this signals a possible reshaping of the insurance business model in India. If the regulator accepts a scale-based approach, smaller players could gain room to grow, while larger companies may keep their efficiency edge.

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