Insurance Brokers Warn IRDAI’s Distribution Overhaul Could Wipe Out 70% of Revenue

IBAI says IRDAI’s ‘Recalibrating Economics of Insurance Distribution’ paper could hit broker revenues by 60–70% and endanger ~10 lakh jobs, and has asked for the feedback deadline to be pushed to end-December 2026.

The Insurance Brokers Association of India (IBAI) warned on 6 October 2026 that the IRDAI’s proposed distribution overhaul could slash broker revenues by 60–70% and put ~10 lakh (1 million) jobs at risk out of the 83 lakh people working in the insurance distribution sector.

The flashpoint is IRDAI’s consultation paper, ‘Recalibrating Economics of Insurance Distribution’ (issued 23 September 2026), which proposes reintroducing product-wise commission caps alongside tighter expenses-of-management limits — a direct hit to broker economics.

IBAI has sought an extension of the feedback deadline from 25 October to end-December 2026, asking for more time to respond to the sweeping proposals.

IRDAI chair Ajay Seth has defended the reforms, pointing to broker commissions in general insurance rising 173% from FY23 to FY25, with the average commission rate climbing from 8.5% to 17% — numbers the regulator says justify recalibration.

Why it matters for founders

Regulatory resets can redraw an entire sector’s economics overnight. Insurtech founders and broker-network startups should model a capped-commission world now — and watch the December feedback deadline for the final shape of the rules.