• Distribution reform proposals: The IRDAI consultation paper proposes hard commission caps, tighter Expense of Management (EoM) limits (12.5% for life and 20% for general insurers over five years), and a unified distributor architecture (IDEs and IDPs).
• Segment commission changes: The proposal sets nil commissions on new vehicle third-party motor insurance and 5% on own damage covers, while industry leaders highlighted that new retail health acquisition demands significantly higher effort and payout than policy renewals.
• Expected operational disruption: General insurers estimate a 30% to 40% operational disruption across channels, IT infrastructure, and distributor workflows to meet proposed transparency and compliance requirements.
• Alternative framework suggestions: Insurers advocate for a tiered, graded EoM framework tailored to company size and lifecycle—similar to the mutual fund industry's tiered AUM model—and periodic milestone reviews instead of a rigid, one-size-fits-all approach.