Irdai's fee cap proposal rattles distributors; insurance stocks tumble

Irdai's proposed commission caps could hit distributor incomes, with banks and NBFCs facing pressure from lower payouts on insurance products

The regulator’s proposed commission caps could pressure insurance-distribution income, particularly for banks and non-banking financial companies (NBFCs) with multiple insurer tieups, incentive-led payouts and loan-linked products. L&T Finance is the most exposed among NBFCs, with insurance commissions contributing 26 per cent of FY26 profit before tax, while Piramal Finance’s share was 38.4 per cent in FY25; Axis Bank and HDFC Bank face greater exposure among large private lenders.  NBFC-sourced life premiums nearly trebled to ₹10,300 crore in FY25, with 42 per cent paid out as commissions. Distributors could face 30-66 per cent cuts, prompting consolidation and slower growth. Shares of online distributors PB Fintech and Turtlemint plunged 36 per cent and 20 per cent, respectively. 

 

 

 

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