Indian insurers lobby for tiered expense caps to aid smaller players
Smaller Indian insurers are urging the regulator to allow higher expense-of-management limits on early premium volumes, with ratios decreasing as they grow.
In response to the Insurance Regulatory and Development Authority of India's (IRDAI) move to cap expense-of-management ratios, smaller insurers are seeking a flexible model that ties expense limits to premium size rather than assets. Under the proposal, insurers could incur a higher EoM percentage on their first tranche of premium, with the allowed ratio tapering off as they surpass defined premium thresholds. Industry participants say the structure would give newcomers room to invest in distribution, technology and product innovation while avoiding long-term high cost ratios that favor large incumbents.
The regulator has invited comments from the sector, with a deadline of October 25 to submit feedback. Final thresholds and ratios will be set after reviewing the industry’s input.
