IRDAI’s New Insurance Commission Rules: What Could Change for Health Insurance Buyers in 2026?
The Insurance Regulatory and Development Authority of India (IRDAI) has proposed a significant overhaul of how insurance is distributed in India. Its two-part public consultation paper, “Recalibrating Economics of Insurance Distribution,” was released on 23 September 2026 and covers distribution structures, commissions, expenses, market conduct, transparency, and digital infrastructure.
For health insurance customers, one notable proposal is a new commission framework that considers the insurance segment, product type, distribution channel, product complexity and the effort involved in selling and servicing a policy. The proposals also include stronger measures against mis-selling and greater disclosure of commission structures.
These are proposals, not final rules. IRDAI has invited stakeholder feedback until 25 October 2026.
What Has IRDAI Proposed?
Key proposals include:
- Reworking insurance distributor commission structures
- Lowering insurers' Expense of Management (EoM) limits over a phased period
- Greater disclosure of commission structures
- Stronger safeguards against mis-selling
- Restrictions on certain volume-linked and reward-linked incentives
- Simplification of the insurance distribution architecture
- Greater use of digital infrastructure such as Bima Sugam and the Public Insurance Registry (PIR)
- Greater transparency around how insurance is distributed and serviced
The objective stated by IRDAI is to create a more customer-centric, competitive, efficient and transparent insurance distribution ecosystem.
Why Are Insurance Commissions Being Revisited?
According to reporting on the consultation paper, IRDAI has highlighted a significant increase in distributor remuneration compared with growth in business volumes.
Between FY23 and FY25, new business premium generated through a sampled group of corporate agents increased from ₹63,000 crore to ₹80,000 crore, a 28% increase. During the same period, total distributor remuneration increased from ₹9,580 crore to ₹21,600 crore, or 125%.
The regulator has also pointed to increasing distribution costs in general insurance and rising commission rates in retail segments such as health insurance and motor insurance.
What Could Change for Health Insurance?
The consultation paper proposes product- and channel-specific commission structures. The proposal considers:
- Type of insurance product
- Distribution channel
- Product complexity
- Effort required to sell the product
- Effort required to service the customer
The proposed framework is therefore not simply about applying one identical commission percentage to every insurance product.
Will Health Insurance Premiums Become Cheaper?
Not necessarily.
IRDAI's proposal aims to reduce structural and distribution costs, but the consultation paper does not mean that health insurance premiums will automatically fall if the proposals are implemented.
Premiums are influenced by several factors, including age, medical risk, sum insured, claims experience, healthcare costs, policy benefits, insurer operating costs and product design.
Consumers should therefore not assume that a change in distributor commissions will automatically result in a specific premium reduction.
What Does IRDAI's Proposal Say About Mis-Selling?
IRDAI has proposed measures including documenting customer needs and suitability, bringing direct and indirect remuneration within the regulatory definition of commission, and maintaining an audit trail for specified sales.
The proposals also include restrictions on volume-linked or reward-linked incentives for bank and NBFC employees involved in selling insurance.
The consultation paper further proposes identifying the individual involved in a sale and allowing commission claw-backs in cases of mis-selling.
What Are “Dark Patterns” in Insurance?
IRDAI has proposed stronger controls around certain digital sales practices. This includes prohibiting dark patterns on insurance websites, including practices that require customers to provide personal information simply to access product features or pricing information.
When shopping for health insurance online, customers commonly compare premiums, sum insured, waiting periods, deductibles, room-rent limits, network hospitals, exclusions and claim conditions.
Why Commission Transparency Matters to Health Insurance Buyers
IRDAI has proposed that insurers and large distribution entities disclose their commission policies and structures in a simple and accessible manner.
For consumers, greater transparency could make it easier to understand the distribution process and distinguish between:
Policy features → Insurance cost → Distribution cost → Service
However, commission disclosure alone should not determine whether a policy is suitable. The actual policy benefits and conditions remain important.
What Should You Compare Before Buying Health Insurance?
1. Sum Insured
Check whether the coverage amount is appropriate for your age, family size and healthcare requirements.
2. Waiting Periods
Check the waiting period for pre-existing diseases and specific treatments.
3. Deductibles
Understand whether the policy has a deductible and how it works, particularly for super top-up plans.
4. Exclusions
Read what the policy does not cover instead of focusing only on the benefits.
5. Hospital Network
Check whether hospitals you may actually use are included in the insurer's network.
6. Co-Payment and Sub-Limits
These can affect the amount you ultimately pay during a claim.
7. Claim Conditions
Understand documentation, notification requirements and other claim-related conditions.
This is where an AI Health Insurance Advisor can help organise the comparison.
Can an AI Health Insurance Advisor Help You Compare Policies?
Comparing health insurance policies can involve many variables. An AI Health Insurance Advisor can help users organise information around coverage, waiting periods, deductibles, exclusions, hospital networks and other policy features.
At CoverTiger, Ira is the AI Health Insurance Advisor designed to help users understand and compare health insurance options.
Explore CoverTiger Health Insurance Plans
The final decision should still be based on the actual policy wording, eligibility conditions and the individual's insurance needs.
What Is Bima Sugam and Why Is It Part of the Proposal?
The consultation paper proposes Market Infrastructure Institutions (MIIs) and identifies Bima Sugam as a digital, pull-based insurance marketplace.
The broader objective is to make insurance easier to compare, purchase and service while improving transparency and access. IRDAI has also proposed greater use of the Public Insurance Registry (PIR) to support comparison, portability and operational efficiency.
What Is the Proposed New Distribution Structure?
IRDAI has proposed three broad categories:
- Insurance Distribution Entities (IDEs)
- Insurance Distribution Persons (IDPs)
- Market Infrastructure Institutions (MIIs)
The proposed structure is intended to simplify the distribution ecosystem and make it easier for consumers to understand who they are purchasing insurance through.
What Are the Proposed Expense-of-Management Changes?
For life insurers, the proposed limit would move to a company-level basis linked to Gross Direct Premium Income (GDPI), with a proposed ceiling of 15% within two years and 12.5% within five years.
For general insurers, the basis would shift from Gross Written Premium (GWP) to domestic GDPI, with the proposed limit reducing from 30% of GWP to 20% of GDPI over five years.
These are proposed changes and should not be treated as current final limits.
What Does This Mean for Health Insurance Customers in 2026?
The proposed changes focus on:
Transparency → Commission disclosure → Suitability → Mis-selling safeguards → Digital comparison → Distribution costs
The proposals do not change the terms of existing health insurance policies simply because the consultation paper has been released.
Customers should continue to evaluate policies based on their actual coverage and policy wording.
Should You Wait for the New Rules Before Buying Health Insurance?
There is no general rule that consumers should delay buying health insurance because of a consultation paper.
If you are currently evaluating health insurance, compare coverage amount, premium, waiting periods, exclusions, deductibles, co-payment, hospital network, claim conditions and family coverage.
You can use an online health insurance comparison approach to review these factors together.
Frequently Asked Questions
What has IRDAI proposed in September 2026?
IRDAI has proposed reforms covering insurance distribution structures, commissions, expenses, market conduct, transparency and digital infrastructure through its consultation paper titled “Recalibrating Economics of Insurance Distribution.”
Will insurance commissions be capped under the new rules?
IRDAI has proposed product- and channel-specific commission limits. These are currently proposals under consultation and are not final rules.
Will health insurance premiums become cheaper?
The proposed reforms aim to improve cost efficiency, but they do not guarantee that health insurance premiums will automatically decrease.
What is IRDAI doing to reduce insurance mis-selling?
The proposals include customer-needs and suitability documentation, commission transparency, restrictions on certain incentives, individual seller identification and potential commission claw-backs in cases of mis-selling.
What are dark patterns in insurance?
Dark patterns are digital design practices that can influence or restrict consumer choices. IRDAI has proposed prohibiting certain practices, including requiring personal details simply to access insurance product information or pricing.
When will the new IRDAI rules become final?
The proposals are currently under consultation. IRDAI has invited stakeholder comments and feedback until 25 October 2026. Any final regulations would depend on the consultation and subsequent regulatory process.
Can an AI Insurance Advisor help compare health insurance?
Yes. An AI insurance advisor can help users organize and compare factors such as premiums, coverage, waiting periods, deductibles, exclusions, and hospital networks. CoverTiger's Ira is designed to help users understand and compare health insurance options.
Final Takeaway
IRDAI's September 2026 consultation paper proposes significant changes to India's insurance distribution ecosystem, including commission reforms, lower expense limits, greater transparency, stronger mis-selling safeguards, and expanded digital infrastructure.
For health insurance buyers, the important point is that these are proposed reforms, not final rules.
Consumers should continue to evaluate health insurance based on the actual policy features that affect their coverage—including the sum insured, waiting periods, deductibles, exclusions, hospital network, and claim conditions.
As insurance becomes increasingly digital, tools such as CoverTiger's AI Health Insurance Advisor Ira can help consumers organize these factors and make the comparison process easier.
