Irdai’s proposed distribution reforms aim for orderly transition: Ajay Seth | Insurance News

Insurance Regulatory and Development Authority of India (Irdai) Chairman Ajay Seth on Thursday said the intent of the proposed consultation paper on distribution was not to disrupt existing business models but to facilitate an orderly transition to a more efficient system, adding that the reforms could create business opportunities within and beyond the insurance sector. Separately, he also said that the beta stage of the proposed Public Insurance Registry (PIR) would be out by January 2028.

 

“The concern about loss of livelihood is sort of misplaced. The intent is not to disrupt any business model, the attempt is to have an orderly transition to a better system. There are enough provisions wherein more business opportunities can be created within the insurance sector and even beyond the insurance sector,” said Seth.

  

“There is absolutely no intention that there should be a disruption for any market player or individual. There must not be any disruption, at the same time everybody must move towards better efficiency,” he added.

 

Following the release of a consultation paper by Irdai suggesting a major overhaul of insurance distribution commissions, the Insurance Brokers Association of India (IBAI) had said that there would be a loss of nearly 1 million jobs and an almost 60-70 per cent loss of revenue for distributors.

 

Seth also said that Irdai was engaging with insurers and distributors ahead of the October 25, 2026, deadline for submitting comments on the consultation paper. He also said that there was differing feedback across stakeholder groups. He said that stakeholders should explain the business and economic rationale behind their recommendations, including how the proposals would benefit policyholders, and that Irdai would carefully consider each suggestion.

 

According to the Irdai chairman, larger and smaller insurers, new entrants and different categories of distributors had raised different concerns, including the need for longer transition periods and the treatment of small-ticket insurance policies.

 

Further, on the inclusion of insurance policies in consolidated account statements (CAS), Seth said that they were working to improve the insurance records system through the proposed public insurance infrastructure, though it would take time given the lack of established infrastructure such as capital market depositories.

 

He also said that there continued to be interest in foreign direct investment (FDI) in India’s insurance business, particularly in insurance manufacturing, covering both greenfield and brownfield investments across the life and general insurance sectors. Irdai also remains in discussions with other financial sector regulators, including through formal exchanges of comments, as part of its inter-regulatory coordination process.

 

Separately, he also said that Account Aggregators could play an important role in improving insurance product suitability and underwriting. He also identified several potential use cases for the Account Aggregator ecosystem in the insurance sector, including lending against the surrender value of insurance policies, which was being explored.

 

Seth also observed that premium financing could help policyholders pay annual premiums through instalments, prevent policy lapses by enabling customers facing temporary financial difficulties to pay their remaining premiums, and help lenders assess their insurance portfolios across multiple insurers, among others.

 

However, he added that these use cases would require further development, standardised data, collaboration among regulators and industry participants, and commercially viable business models.

 

He also explained that the Account Aggregator ecosystem, Bima Sugam and the proposed Public Insurance Registry (PIR) would play complementary roles in enabling financial information sharing, facilitating direct insurance purchases and supporting business-facing insurance information requirements.

 

Seth said that PIR was being developed as a digital public infrastructure to improve the standardisation, accessibility and exchange of insurance information among financial institutions and other authorised participants.

 

Irdai had issued a consultation paper, and the last date for submitting feedback was October 17, 2026. Seth said that the Insurance Information Bureau (IIB) would be transformed into a not-for-profit company and would host PIR, with a beta version being considered for January 2028.