The Insurance Regulatory and Development Authority of India (IRDAI) has lifted limits on the payment of commissions to insurance intermediaries.

The new rules:

  • IRDAI has asked insurance companies, including life and non-life, to fix an overall cap on commission to agents, brokers and other intermediaries, giving more flexibility to insurers in managing their expenses.
  • This means the regulator has replaced the earlier cap on different commission payments to various types of intermediaries with an overall board-approved cap which should be within the allowed expenses.


  • This rationale of the regulation is to enable and provide flexibility to the insurers, both life and general insurers, to manage their expenses within the overall limits based on their gross written premium to optimally utilize their resources for enhancing benefits to policyholders.
  • Benefit to insurance companies and agents
  • With the new regulations, an insurance company can pay a higher commission to an agent if the business brought in is good and claim-free.
  • The liberty to give commission to an agent is left to the company.

The new norms will:

  1. facilitate greater product innovation,
  2. development of new product distribution models and
  3. lead to more customer-centric operations.
  4. It will also increase insurance penetration and provide flexibility to insurers in managing their expenses.
  5. It will smoothen adherence to compliance norms.
  6. The proposed regulations will ensure parity across varying business models.

What do Expenses of Management mean?

Expenses of Management (EOM) include:

  • all expenses in the nature of operating expenses of general or health Insurance business and
  • commission to the insurance agents or insurance intermediaries.
  • It also includes commission and expenses on reinsurance inward, which are charged to the revenue account.

Who are insurance intermediaries?

  • Insurance intermediaries include:
  • corporate agents,
  • insurance brokers,
  • web aggregators,
  • insurance marketing firms and
  • a common public service centre
What is IRDAI?

The Insurance Regulatory and Development Authority of India (Irdai) is an autonomous and statutory body which is responsible for managing and regulating insurance and re-insurance industry in India.

Irdai is a 10-member body-

1.     a chairman,

2.     five full-time members and

3.     four part-time members.

4.     It was constituted under an Act of Parliament in 1999.

5.     Headquarters: Hyderabad.


·        It has to protect the interests of insurance policy holders and ensure that they are treated in a just manner.

·        It also has to monitor policy issuers to ensure that the common man’s interests are not subverted.


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