Ajay Seth, Chairman of the Insurance Regulatory and Development Authority of India (IRDAI), said brokers must disclose the commissions they receive from policyholders [1].
This move aims to address systemic transparency issues within the Indian insurance market. By mandating disclosure, the regulator intends to curb the mis-selling of insurance products and rebuild consumer trust in financial intermediaries [2, 3].
Seth said the current lack of transparency is an issue during an appearance on CNBC TV18. He said that the practice of brokers withholding commission details from the clients they serve is a contradiction [1]. The regulator believes that clear disclosure is necessary to ensure that policyholders understand the incentives driving the advice they receive from brokers.
This push for transparency comes amid ongoing challenges regarding consumer disputes in the sector. According to data from the Insurance Ombudsmen, 41,055 grievances were decided during the 2025-26 fiscal year [4].
Of those decided cases, 79% were resolved in favor of the policyholders [4]. These figures highlight a significant gap between insurance provider actions and consumer rights, a gap the IRDAI hopes to narrow through stricter disclosure rules.
The proposal to link commissions to product complexity and policy retention is part of a broader effort to align broker incentives with the long-term interests of the customer [2]. This strategy is designed to discourage the sale of high-commission products that may not suit the actual needs of the buyer [3].
“Brokers not informing policyholders about commissions is a contradiction.”
The IRDAI is shifting from a light-touch regulatory approach to one that prioritizes consumer protection. By forcing brokers to reveal their earnings, the regulator is attempting to remove the 'hidden' incentive structures that often lead to mis-selling. This move aligns the Indian insurance market with global transparency standards, potentially reducing the volume of grievances reaching the Insurance Ombudsman by ensuring consumers enter contracts with full knowledge of the broker's financial stake.
