India’s insurance industry could face major job losses if proposed regulatory changes are implemented, with the Insurance Brokers Association of India (IBAI) warning that nearly 10 lakh livelihoods may be at risk.

The association has also cautioned that the proposed reforms could reduce revenues for insurance intermediaries by as much as 70%, potentially disrupting the country’s insurance distribution network.

However, these figures are industry estimates, and the proposed regulations have not yet been finalised.

Why Is IRDAI Planning New Insurance Rules?

The Insurance Regulatory and Development Authority of India (IRDAI) released a consultation paper on September 23, 2026, outlining changes to how insurance products are distributed and sold.

The proposals include commission limits for brokers, agents and other intermediaries, alongside restrictions on insurers’ management expenses.

The regulator aims to reduce excessive commissions, prevent mis-selling, improve transparency and ensure that policyholders receive better value.

The proposed framework also seeks to address concerns about rising distribution expenses without a corresponding improvement in insurance penetration.

Insurance Brokers Warn of 70% Revenue Loss

According to IBAI, the proposed commission restrictions could reduce revenues for some insurance intermediaries by 60% to 70%.

Pavanjit Singh Dhingra, a director of IBAI, warned that the changes could make several insurance distribution businesses financially unviable.

The association argues that commissions are necessary not only for selling policies but also for customer acquisition, renewals, documentation and claims assistance.

Smaller insurance products could become particularly difficult to distribute if the commission earned is insufficient to cover servicing costs.

10 Lakh Jobs Could Be Affected

The insurance distribution ecosystem supports approximately 83 lakh people, including agents, brokers, point-of-sale representatives and other professionals.

IBAI estimates that at least 10 lakh jobs could be at risk over five years if the proposals are implemented in their current form.

The impact could extend to smaller towns and rural markets, where insurance intermediaries play an important role in helping customers understand policies and process claims.

These are projected job losses rather than layoffs that have already occurred.

Brokers Seek Extension Until December

IBAI has requested that the deadline for submitting feedback be extended from October 25 to the end of December 2026.

The association also wants a comprehensive impact assessment before the new framework is introduced.

It has urged the regulator to reconsider broad commission caps and retain elements of the existing expense-of-management framework.

IRDAI Defends Need for Reforms

IRDAI maintains that the reforms are intended to improve efficiency and make insurance more affordable.

Regulatory officials have challenged predictions of widespread job losses, arguing that a more efficient distribution system could ultimately create employment opportunities and expand insurance access.

The disagreement highlights the challenge of balancing lower distribution costs with employment, customer support and insurance penetration.

Summary

India’s insurance brokers have warned that IRDAI’s proposed distribution reforms could reduce intermediary revenues by up to 70% and put 10 lakh jobs at risk over five years. The industry is seeking more time for consultation and a detailed impact assessment. IRDAI, meanwhile, argues that the changes could improve affordability, transparency and efficiency. No final regulations have been announced.