The regulator has asked a total of 23 insurers – eight life insurers and 15 non-life insurers – to explain how spending norms were breached. | Photo credit: Getty Images
The regulator has asked a total of 23 insurers – eight life insurers and 15 non-life insurers – to explain how spending norms were breached. The agency is currently investigating the declarations of several insurers.
“There is an elaborate procedure usually followed by the regulator, who will decide on the criminal action after hearing from the insurers who have violated the norms. It will be a case-by-case investigation and it may take some time,” a source said.
The IRDAI (Expenses of Management, including Commission, of Insurers) Regulations, 2024, prescribe the limits for management expenses taking into account the type and nature of the product, premium payment term and duration of insurance business.
Misselling products
The regulator is now concerned about the phenomenal increase in commissions during the last financial year (2024-25) compared to the previous year as exceeding the limits not only indicates non-compliance but also a possible case of mis-selling of insurance policies, which is a matter of concern in the industry.
According to IRDAI data, eight out of 25 corporate life insurers spent higher than the permissible limits. Gross management costs in the sector stood at ₹1.38 lakh crore during 2024-25, or 15.6 per cent of total gross premium. The total commission paid stood at ₹60,800 crore, marking an 18 percent increase in total commission spend compared to the previous year.
In the non-life business, 15 insurers did not meet the cost limits. Gross commission costs of public sector general insurers, private general insurers, standalone health insurers and specialty insurers stood at ₹47,266 crore in FY25, compared to ₹39,601 crore in FY24.
Options available
When contacted, the MD & CEO of a major private life insurer said the regulator could consider several options, including radical regulatory changes along the lines of those in mutual funds. “However, according to our understanding, the current regulations for 2024 are new and applicable. All that matters is compliance with them,” he said.
In the wake of rising concerns over mis-selling of policies, IRDAI is expected to crack down on non-compliance with standards. The Reserve Bank of India has also expressed concerns about the rising costs of insurance companies.
The final study on the current fiscal year’s data will be analyzed in the second quarter of next year. There are a total of 74 registered insurance companies, including 8 public sector companies in the life and non-life business.
Published on January 9, 2026
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