The regulator has asked a total of 23 insurers – eight life insurers and 15 non-life insurance companies – to explain how the norms on expenses were violated.
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Many insurers are now facing scrutiny from the Insurance Regulatory and Development Authority of India (IRDAI) for overshooting the prescribed limits on expenses, which mainly include commissions. 

The regulator has asked a total of 23 insurers – eight life insurers and 15 non-life insurance companies – to explain how the norms on expenses were violated. The body is in the process of examining the submissions of some insurers.

“There is a comprehensive procedure generally followed by the regulator, which will decide the penal action after hearing from the insurers who violated the norms. It will be a case-to-case examination and may take some time to complete,’’ said a source.

The IRDAI (Expenses of Management, including Commission, of Insurers) Regulations, 2024, prescribe the limits to expenses of management, taking into account the type and nature of the product, premium-paying term, and duration of the insurance business.

Mis-selling products

The regulator is now concerned about the phenomenal increase in the commissions during the last fiscal (2024-25) compared to the previous year, as overshooting the limits indicates not only non-compliance, but also a possible incidence of mis-selling of insurance policies which has been an area of concern in the industry. 

As per the IRDAI data, eight out of 25 life insurers spent higher expenses than permissible limits in business. The gross expenses of management in the industry were ₹1.38 lakh crore during 2024-25, or 15.6 per cent of the total gross premium. The total commission paid was ₹60,800 crore marking an 18 per cent increase in the total commission outgo compared to the previous year. 

In the non-life business, 15 insurers were non-compliant with the limits of expenses. The gross commission expenses of public sector general insurers, private general insurers, standalone health insurers and specialised insurers stood at ₹47,266 crore in FY25 compared to ₹39,601 crore logged in FY24.

Options available

When contacted, MD & CEO of a major private life insurer said the regulator could consider different options including radical changes in the regulations on the lines of those in the mutual funds. “However, as per our understanding, the present 2024 regulations are new and apt. What matters is only compliance,’’ he said. 

In the wake of increasing concerns over mis-selling of policies, IRDAI is expected to act tough on non-compliance of norms. The Reserve Bank of India, too, has expressed concerns over the increasing expenses of the insurance companies.

The final scrutiny of the current financial year’s data will be analysed by the second quarter of next year. There are a total 74 registered insurance companies, including 8 public sector companies in life and non-life business.

Published on January 9, 2026