Insurance rules to curb mis-selling are set to become stricter, with the Insurance Regulatory and Development Authority of India (Irdai) planning tighter norms on commission disclosure and conflicts of interest. The changes follow amendments cleared in the Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Bill, 2025.
The Bill gives Irdai more power to regulate commissions paid to insurance agents and intermediaries. It allows the regulator to set limits on commissions, decide how they are paid, and require insurers and distributors to clearly disclose these commissions to customers. This could lead to rules that make insurers tell buyers how much commission is built into an insurance policy.
The Bill also strengthens conflict-of-interest rules, especially in bancassurance. It bars directors or senior officers of insurance companies from holding similar positions in banks or investment firms. Since banks are major sellers of insurance products, this step aims to prevent undue influence in pushing policies linked to a particular insurer.
For other intermediaries such as brokers, web aggregators and corporate agents, Irdai will enforce conflict-of-interest norms through regulations. The regulator will also have the power to set eligibility rules, check whether intermediaries are fit and proper, and suspend registrations in case of violations.
Overall, the changes are meant to reduce mis-selling by making commissions more transparent and improving governance across insurance distribution. The issue has been under focus recently, with finance minister Nirmala Sitharaman and RBI governor Sanjay Malhotra raising concerns about mis-selling of insurance products by banks in India.
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