IRDAI to implement distribution reforms only after consensus: Ajay Seth

Amid concerns over the impact of the proposed changes in insurance distribution, IRDAI Chairman Ajay Seth on Tuesday (October 27, 2026) assured the industry that the regulator will implement the reforms only after reaching a consensus.

Speaking at the annual Business Standard BFSI Insights Summit, Mr. Seth said the regulator will work to expedite claims in case of health policies.

Mr. Seth said he has been meeting people extensively since the release of the discussion paper on distribution reforms to hear out the industry's concerns.

"I'm in the listening mode, hearing what the concerns are…," he said, adding that the release of the paper has generated a necessary dialogue around the insurance sector's role and the changes that are required.

"I'll attempt to build consensus for the reforms needed for the sector and for our economy," he added.

Regarding concerns around commissions proposed as part of the new proposals, Mr. Seth said the paper suggests higher commissions initially as the amount of efforts required to sell a policy is much higher than the efforts needed at the time of renewal.

Commenting on the online insurance aggregators, Mr. Seth said such entities play an important role, but they also tend to take up other work like having a physical distribution channel eyeing the penetration gap, and also questioned the need for having dynamic pricing.

He also questioned the need for sharing personal details before a premium structure is shared, including the insistence on excluding their telephone numbers from 'do not disturb' lists.

On the issue of portability, Mr. Seth rued that the activity is concentrated in a very small set of entities, pointing out that the commissions paid may be playing a role in customer behaviour.

Highlighting that 60% of the port-ins activity was concentrated in three entities, reflecting customer choice for better insurer, Mr. Seth said the same set of entities also accounted for 20% of port-outs.

"If a large number of people were so convinced about the good quality, people with them should not have been leaving out. So what is at play? The commission is driving behaviour from one to another," he said.

Mr. Seth also said that we need to learn from what has succeeded in the country, and the best practices from the banking and capital markets industry needs to be picked up by the insurance sector as well.

He said that there is no information available on the amount of time taken for a hospital admission or discharge to be done in the case of a health policy and added that this will be an area of focus for IRDAI going forward.

The career bureaucrat-turned-regulator added that the health insurance sector has "maximum dissatisfaction" levels among the customers.

Mr. Seth said that he sees the Bima Sugam, a marketplace for insurance, launching in the next 30 to 45 days, starting with a motor insurance offering.

Stressing on the need to have a relook at how we assess the industry's performance, Mr. Seth advocated a move away from the concept of looking at penetration in favour of number of lives covered and how effective is the cover for every rupee of premium paid.

General insurance has been growing at about 1.3 times the growth in nominal GDP while life is at par with nominal GDP growth, Seth said.