Why it is in the news
On 23 September 2026, the Insurance Regulatory and Development Authority of India (IRDAI) released a consultation paper titled “Recalibrating Economics of Insurance Distribution”, proposing hard, product-wise commission ceilings — first-year commission on long-term life policies capped at 20% of premium for distribution entities and 25% for individual agents — and a phased cut in insurers' Expenses of Management (EoM) to 12.5% (life) and 20% (general) of gross direct premium over five years. Shares of insurance distributors, insurers and banks fell sharply on the proposal. Comments are invited till 25 October 2026.
The exam angle
Issue: India's insurance market is growing in premium but not in penetration, while distribution costs have risen much faster than premiums — raising questions of consumer value, mis-selling and regulatory design.