From mint · · 1m
₹10 crore cover at 70? Insurance reform must start with the buyer
Insurance reform must prioritize buyer suitability over sales incentives.
In brief
Insurance reform must prioritize buyer suitability over sales incentives. India's insurance regulation should focus on product suitability for buyers rather than commission caps to prevent mis-selling. Originally reported by mint.
Current insurance model
The current insurance model is costly and heavily incentivized with sales targets.
Irdai consultation paper
Irdai's September 23 consultation paper recognizes the model's cost and incentives.
Mis-selling problem
Life insurers sell high-value products to seniors without assessing suitability.
Irdai's recommendations
Irdai suggests reducing expense limits, caps on commissions, and tighter mis-selling controls.
Data shows issues
Corporate agents' new premiums rose 28% from FY23 to FY25 while distributor remuneration jumped 125%.
Suitability requirements
Regulation should assess age, income, liquidity, and risk capacity before selling products.
Reforms needed
Remuneration must follow policy duration, and unsolicited sales need tighter controls.
In short
India's insurance regulation should focus on product suitability for buyers rather than commission caps to prevent mis-selling.
