IRDAI commission caps unlikely this fiscal; new rules may take effect April 1, 2027: Nilesh Sathe

Former IRDAI member Nilesh Sathe expects the proposed commission and expense-management changes to take effect from April 1, 2027, with insurers, brokers and other stakeholders having little room to avoid a structural reset.

The insurance industry is likely to see the proposed overhaul of commissions and expense-management norms take effect from April 1, 2027, with former IRDAI member Nilesh Sathe saying insurers, brokers and other distribution stakeholders will have to fundamentally realign their businesses with the new framework. Sathe said he does not expect major reversals in the proposals during the consultation process, though some provisions could be tweaked before the final regulations are notified. “By and large, do not expect change in what is proposed. There may be some tweaking here and there. 2.5% may go up to 3% or 3.5%, but there cannot be and there will not be a restoration of what it was in the past. So insurance companies, brokers, all stakeholders will have to realign themselves and recalibrate in view of the regulations which will come in place," Sathe told ETBFSI in an interview. Advt

Six-month window for final rules According to Sathe, the regulatory process will have to move quickly if the April 2027 implementation timeline is to be met. Stakeholders have been given time to submit comments, following which IRDAI would examine the responses and come out with draft regulations before the final notification. “The entire process has to be over in the next six months,” Sathe said, explaining that the final regulations would need to pass through the Insurance Advisory Committee and the IRDAI board before being sent to the government for publication in the official gazette.

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