IRDAI Proposes 15–20% Health Insurance Commission and Transparent Digital Premium Comparisons

The news

Insurance Regulatory and Development Authority of India (IRDAI) chairperson Ajay Seth on Tuesday urged digital insurance platforms and online aggregators to allow customers to compare premiums and features without first sharing a mobile number or email address. Speaking at an industry event, Seth said customers have the right to see prices and benefits without providing personal information, and that seeking a phone number in exchange for information followed by sales calls is not the right approach.

Seth also questioned platforms that ask customers for consent to exempt them from Do Not Disturb rules. He said insurance should not follow airline-style dynamic pricing, where ticket prices change with demand and availability, and called for transparent premium comparisons. Separately, IRDAI has proposed reducing the average health insurance commission from about 24 percent to a 15–20 percent range, with higher payments for acquiring new customers and lower payments for renewals. The regulator said high commission reduces the money available for claim payouts and puts upward pressure on premiums. The proposals remain subject to consultation with insurers, distributors and policyholders before finalisation.

What is IRDAI and when was it established?

The Insurance Regulatory and Development Authority of India is the statutory body that regulates and develops the insurance industry in India. It was constituted under the Insurance Regulatory and Development Authority Act, 1999, and began functioning as an autonomous body in April 2000. The Act amended the Insurance Act of 1938, the Life Insurance Corporation Act of 1956, and the General Insurance Business (Nationalisation) Act of 1972 to end the state monopoly and open the sector to private and foreign players. The Malhotra Committee report of 1994 had recommended the creation of an independent insurance regulatory authority, which led to the passage of the IRDA Act.

What is the current practice on digital insurance platforms?

Digital insurance platforms and online aggregators allow prospective buyers to compare policies from different insurers. Some platforms seek a mobile number before displaying premiums and subsequently make sales calls; some also seek consent for an exemption from Do Not Disturb rules. These practices raise concerns about informed choice and customer privacy, which IRDAI has now flagged.

What are the proposed commission changes and their rationale?

The average health insurance commission on new and existing business is about 24 percent. IRDAI has proposed reducing it to a 15–20 percent range, with higher commission for new customers and lower for renewals. The regulator associates high commission with pressure on premiums and less money available for claims. A lower range could reduce distribution costs, although its actual effect depends on the final rules and insurers' pricing decisions.

What are the regulatory priorities beyond commission?

Seth said the insurance industry should focus on providing effective protection to more people and businesses rather than only increasing premium and market share. He called for better claims management, transparency and expanded cashless treatment in health insurance. IRDAI aims to increase the scope of cashless treatment and reduce customer complaints. The proposed changes to commission and distribution costs are being discussed with insurers, distributors and policyholders before finalisation.