Irdai tightens intermediary rules, eases insurers' investment norms

The regulator has mandated greater sales traceability and disclosures for intermediaries while allowing insurers more flexibility in investment across select asset classes

The Insurance Regulatory and Development Authority of India (Irdai) on Friday tightened the regulatory framework for insurance intermediaries. It introduced measures to improve traceability of insurance sales and required certain intermediaries, including majority foreign-owned entities and those crossing specified commission-income thresholds, to make additional disclosures.

 

The amendments cover corporate agents, insurance brokers, insurance marketing firms, web aggregators and common public service centre special purpose vehicles (CPSC-SPVs). They seek to enhance accountability and transparency in the conduct of intermediaries and strengthen policyholder protection.

 

Under the revised framework, a certificate of registration, once issued, will remain valid subject to payment of a non-refundable annual fee. The registration will continue until it is suspended or cancelled by Irdai or surrendered by the intermediary.

 

 

Existing intermediaries holding registrations with three-year validity will have to apply for a fresh certificate by January 31, 2027.

 

Those missing the deadline may apply until March 31, 2027, by providing reasons for the delay and paying an additional fee of ₹750.

 

Intermediaries that fail to apply by the extended deadline will cease to operate and must seek fresh registration under the applicable regulations.

 

Under the annual-fee mechanism, intermediaries must pay the higher of ₹10,000 or 0.04 per cent of commission and other receipts received from insurers during the preceding financial year.

 

The amendments also seek to strengthen accountability at the point of sale by requiring intermediaries to maintain records identifying the individual involved in a sale or solicitation of every insurance policy.

 

The name and functional identity of broker-qualified persons, point-of-sales persons, designated persons, authorised verifiers or other authorised salespersons must be recorded in proposal forms, policy documents and certificates of insurance.

 

Contact details of the relevant branch or office must also be disclosed.

 

For policies sold directly through an intermediary’s digital platform without a salesperson's involvement, the contact details of the principal officer must be included. These tagging requirements will take effect from January 1, 2027.

 

Irdai may also impose conditions on an intermediary’s business at the time of registration or subsequently in the interest of policyholders and the orderly growth of the insurance sector.

 

For insurance marketing firms, principal officers and insurance salespersons must complete at least 25 hours of training once every three years through an examination body recognised by Irdai.

 

Separately, under amendments to regulations governing the actuarial, finance and investment functions of insurers, Irdai has allowed insurers to invest up to 20 per cent in operational infrastructure special-purpose vehicles (SPVs) rated AA or above.

 

The framework also permits combined investments in private limited companies, alternative investment funds (AIFs) and venture capital funds (VCFs) up to 3 per cent for life insurers and 5 per cent for general insurers. It caps overall exposure to promoter groups at 5 per cent of investment assets.

 

Repo and government securities lending transactions have been capped at 25 per cent of available securities or ₹10,000 crore, whichever is lower.

 

To strengthen risk oversight, the regulations mandate a comprehensive annual Financial Condition Report (FCR), covering solvency, reserve adequacy, liquidity, stress testing and Asset-Liability Management (ALM) resilience.

 

Irdai has also allowed insurers to invest policyholders’ funds in unlisted private limited companies, subject to the condition that aggregate investments in such companies, along with investments in AIFs and VCFs, remain within the prescribed limits.