The Insurance Brokers Association of India (IBAI) has said that the Insurance Regulatory and Development Authority of India’s (IRDAI) recently proposed norms could trigger a 60-70% revenue collapse across the insurance broking sector. 

Addressing a press briefing, the industry body representatives also said that the insurance distribution sector, which employs over 83 Lakh people, could see the loss of up to 10 Lakh jobs lost as a result of the economic impact of the proposed policies. 

This comes days after IRDAI proposed reintroducing product-wise commission caps for insurance distributors. The regulator also proposed tighter limits on insurers’ overall expenses over concerns related to disproportionate increases in commissions paid to distributors. 

The industry body has also sought an extension of the deadline to submit feedback on the proposed norms to December-end from October 25 currently. 

While noting that the association supports the regulator’s goal of making insurance more affordable and accessible, the IBAI representatives noted that the proposed sweeping changes threaten small businesses and MSMEs. 

The resulting job losses could impact insurance awareness, policy renewals, assistance to policyholders, and penetration of insurance among underserved communities, the representatives added.

The brokers also countered IRDAI’s data that showed that general insurance premiums sourced through brokers had risen 37% whereas commission payouts zoomed 173% between FY23 and FY27. The industry body argued that the rise in commissions since FY23 largely reflected the reclassification of off-book marketing expenses following regularisation, and did not reflect inflationary pressures on insurance consumers. 

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