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IRDAI commission caps may revive shadow payouts while hitting 70% of corporate broking revenue; broking jobs at risk: IBAI

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IRDAI commission caps may revive shadow payouts while hitting 70% of corporate broking revenue; broking jobs at risk: IBAI

IRDAI commission caps may revive shadow payouts while hitting 70% of corporate broking revenue; broking jobs at risk: IBAI

IBAI members argue the proposed architecture risks penalising customer-led broking while failing to adequately address forced insurance distribution through lenders and other channels.

The Insurance Brokers Association of India (IBAI) has warned that the proposed overhaul of insurance distribution could put around 70% of corporate broking revenue at risk, while arguing that blanket commission caps could create unintended incentives for insurers and distributors to revive alternative payout structures. IBAI members on Tuesday said the regulator should distinguish between customer-driven distribution and forced sales, particularly lender-led insurance, rather than impose a common commission architecture across channels. The association also warned that hard product- and channel-level caps could recreate the conditions that had led to ₹824 crore of GST input credit at 15 insurers before the 2023 reforms, as insurers and distributors could look for alternative ways to compensate for capped commissions. Advt

70% revenue exposure, corporate broking jobs at risk Ashok Jain, Treasurer, IBAI said that the proposed changes could have a significant impact on corporate broking economics, with around 70% of revenue potentially affected. Another estimate put the potential impact on corporate broking jobs at 60-70%, highlighting the employment implications of changes to distribution remuneration and architecture. The top brokers argued that the impact cannot be assessed merely by looking at the percentage commission paid to intermediaries, as the absolute economics of servicing policies determine whether distributors can continue servicing smaller accounts.


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