Indian brokers warn regulator's commission caps could jeopardize millions of jobs

In a recent discussion paper, the Insurance Regulatory and Development Authority of India suggested capping commissions for banks, brokers and agents, linking payouts to the complexity of insurance products and the effort required to sell them. Mandatory covers such as third-party motor policies would earn little or no commission, a move the regulator says will reduce costs for policyholders. The Insurance Brokers Association of India responded with letters to the finance minister and prime minister, contending that the reforms would divert money from distributors and insurers' staff to company owners, offering no guarantee of lower premiums.

The IBAI warns the changes could jeopardise at least one million jobs within five years, not counting insurers' salaried employees, and may spur unethical practices like disguising excess commissions as marketing fees. It also flags regulatory uncertainty after recent foreign-direct-investment liberalisation and urges a published impact assessment covering policyholders, employment, public insurers and foreign investment before any caps are enforced. The association has asked for a meeting and for the existing rules to remain until the 2028 review.