IRDAI Proposes Changes to Motor Insurance Commissions and Sales
IRDAI has proposed lower commissions, greater digital access and more customer choice in motor insurance amid concerns over dealer-linked sales practices.
IRDAI has proposed changes to the way motor insurance is sold, raising concerns over high commissions, limited customer choice and possible conflicts in dealer-linked distribution. The regulator says some motor insurance products are relatively simple to sell, yet distributors can receive substantial commissions.
According to IRDAI’s consultation paper, average motor insurance commissions stand at around 24%, with rates ranging from 13% to 50%. OEM brokers and Motor Insurance Service Providers have a roughly 30% market share across new and old vehicles. In FY25, they generated about Rs 29,000 crore in premiums and received nearly Rs 7,050 crore in commissions.
The regulator has also flagged commissions on old-vehicle policies and insurance bundled with vehicle loans. It said some banks and NBFCs receive commissions while customers may not always be aware of such arrangements.
IRDAI is proposing a stronger digital route through Motor Insurance Information platforms such as Bima Sugam, where customers could compare and purchase policies from multiple insurers. Motor dealers may also have to clearly display these alternatives, including QR codes.
The proposed framework would further prevent dealers from denying cashless repair services simply because a customer purchased insurance elsewhere. IRDAI also wants lower commissions for mandatory third-party cover and easy-to-sell new-vehicle policies.
The proposals are aimed at making motor insurance more transparent and competitive—because choosing your insurer should ideally involve more than simply accepting whatever comes with the car keys.
